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Mining stocks kept the market in the hunt for a fourth gain in five sessions on the prospect of increased demand after the US Congress approved a trillion-dollar infrastructure package.
The S&P/ASX 200 reached mid-session unchanged at 7452.5 following a choppy morning. The index swung from a gain of 16 points to a similar loss before steadying.
BHP, Rio Tinto and other producers of raw materials led the advance. Chalice Mining jumped more than 20 per cent after declaring the biggest nickel deposit in 20 years.
What’s driving the market
Likely winners from the passage of US President Joe Biden’s long-awaited infrastructure spending bill set the pace on both sides of the Pacific. In the US, the Dow climbed 0.29 per cent to a record close as heavy-machinery manufacturer Caterpillar gained 4 per cent. Steel makers and miners also shone.
Here, BHP climbed 0.91 per cent to a one-week high. Fortescue Metals put on 1.12 per cent ahead of this afternoon’s AGM. Rio Tinto gained 0.1 per cent. Lynas Rare Earths added 7.38 per cent, IGO 4.05 per cent, Pilbara Minerals 4.05 per cent and BlueScope Steel 3.69 per cent.
“Investors have waited for a significant step-up in infrastructure spending for decades,” Citi’s Anthony Pettinari said. “We view this generational investment as a significant catalyst for growth for a number of our stocks.”
Wall Street has been on a stealth rally that has lifted the major indices to fresh highs each session without any fireworks. Overnight, the S&P 500 edged up 0.09 per cent to an eighth straight advance. The Nasdaq Composite firmed 0.07 per cent for an 11th consecutive win, its longest streak in almost two years.
The ASX has underperformed in recent months, hampered by the profit hit from lockdowns. Revenues are expected to rebound over the next few months with the release of pent-up demand as the eastern states reopen.
Business confidence figures released this morning showed sentiment is buoyant and trading conditions strong. NAB’s measure of confidence jumped from +10 to +21 last month. Conditions rose to +11 from +5.
“Conditions turned around in October, driven largely by the end of lockdown in NSW,” NAB Chief Economist Alan Oster said. “Confidence is now back in positive territory across all states and in all industries, signalling that there is broad optimism about the way recovery is tracking now that vaccine targets are within reach and restrictions are lifting,” he added.
A drop in US futures dragged the local market off its early highs. S&P 500 futures were recently down 13 points or 0.27 per cent, continuing a recent run of plunges during Asian trading hours.
Going up
Chalice Mining jumped 21.71 per cent on claims it had made the largest nickel sulphide discovery in two decades. The explorer said its Gonneville discovery north-east of Perth was also the largest platinum-group elements find in Australian history.
“Given its sheer scale, the attractive suite of six payable metals it contains and its premier location close to world-class infrastructure and services in Perth, Chalice clearly has the potential to become a leading global player in the green metals space,” Managing Director & Chief Executive Officer Alex Dorsch said.
Afterpay climbed 2.58 per cent, CSL 1.43 per cent, Aristocrat Leisure 0.49 per cent and Wesfarmers 0.28 per cent.
A revenue upgrade helped lift Seven West Media 5.09 per cent to a two-and-a-half-year high. The broadcaster said it was confident it would beat the consensus forecast for full-year earnings of $260 million by between 7 and 10 per cent. The upgrade followed a 145 per cent rise in revenue from 7plus since the start of the financial year.
Going down
A doubled dividend payment and a 76.8 per cent jump in full-year cash earnings failed to satisfy NAB shareholders. The share price dropped 2.15 per cent on news of a 3 per cent dip in operating revenues following a challenging year for the markets and treasury business. Expenses increased by 1.8 per cent. Underlying profit declined by 6.8 per cent.
“FY21 has been a difficult period for Markets & Treasury income but excluding this, revenue was stable over the year and 2 per cent higher in 2H21 compared with 1H21,” CEO Ross McEwan said.
CBA retreated 0.62 per cent, ANZ 1.31 per cent and Westpac 0.68 per cent.
Gold miner Newcrest skidded more than 5 per cent in early trade after announcing the acquisition of Canadian miner Pretivm. The Australian company will acquire the remaining 95.2 per cent of shares in Pretivm that it does not own in a deal valuing its target at $3.7 billion. The cash portion of the deal will be funded from Newcrest’s balance sheet. Shares trimmed their decline to 1.62 per cent by mid-session.
Surfing and adventure sports retailer Kathmandu eased 0.33 per cent after outlining the impact of lockdowns on first-quarter trade. Store sales at Rip Curl declined by 9.4 per cent and at Kathmandu by 17.6 per cent. Online sales increased by 33.8 per cent.
James Hardie hovered near record levels after reporting profits almost tripled over the half-year ending September 30. Net profit attributable to shareholders jumped 182 per cent to US$271.5 million on record quarterly sales in the second quarter. Shares in the company, which hit an all-time high yesterday, eased 0.04 per cent.
A rebound in rent collection helped keep Westfield shopping centre operator Scentre Group near a pandemic-era high. The company collected $1.8 billion in rent for the ten months to the end of October, including $607 million since the end of June. The share price dipped 0.16 per cent.
Other markets
A positive morning on Asian markets lifted the Asia Dow 0.32 per cent, China’s Shanghai Composite 0.314 per cent, Hong Kong’s Hang Seng 0.26 per cent and Japan’s Nikkei 0.11 per cent.
Brent crude edged up ten US cents or 0.12 per cent to US$83.53 a barrel.
Gold dipped US$1.90 or 0.1 per cent to US$1,826.10 an ounce.
The dollar faded 0.2 per cent to 73.99 US cents.
