A relief rally lifted the ASX 200 back above the 7000 level as a pause in this week’s bloodletting on Wall Street brought buyers back to market.
The S&P/ASX 200 bounced 95 points or 1.36 per cent to 7036 by mid-session. The rally brought respite at the end of a week when the benchmark fell 265 points or 3.7 per cent in four sessions.
All 11 sectors rallied. Battered tech stocks bounced 5.1 per cent off a two-year low. Other notable gains included real estate investment trusts, consumer discretionary and healthcare.
What’s driving the market
Corporate news was thin on the ground as the market drew breath after a volatile week. Traders were encouraged by a late partial recovery on Wall Street.
The Dow slashed a 500-point intraday loss to 104 points or 0.33 per cent at the close. The S&P 500 finished 0.13 per cent in the red and on the brink of a bear market. The Nasdaq Composite scraped a slender gain of 0.06 per cent.
Equity markets have fallen heavily this week without the kind of capitulation session that typifies turning points in pullbacks. Overnight, the S&P 500 fell to within 30 points of a bear market before trimming its fall.
“You’re getting this market that really is begging for a bottom, for a relief rally. But, at the end of the day, there really hasn’t been a capitulation day,” Andrew Smith, chief investment strategist at Delos Capital Advisors, told CNBC.
The ASX 200 remained firmly on track for a fourth straight weekly loss. At yesterday’s close, the benchmark had fallen almost 9 per cent since April 20.
This morning’s best ASX performers were yesterday’s worst. The I.T. sector climbed off a two-year low. REITs gained 2.5 per cent. Both sectors have been pummelled this week by uncertainties over the outlook as rates rise.
“Bargain hunters appear to be scooping up technology stocks following a broader market sell-off,” Kunal Sawhney, chief executive at research group Kalkine, said.
“This week has been a tough ride for technology stocks amidst concerns that possible rate hikes could weigh heavily on their future valuations. Speculations have been rife that high-interest rates could make borrowing more expensive for tech and high-growth companies, limiting their profit growth.”
Going up
Several stocks in the tech space reversed much of yesterday’s double-digit declines. Afterpay’s US parent company Block gained 12.3 per cent, Altium 5.95 per cent and Life360 5.86 per cent. Xero bounced 5.62 per cent and Telix Pharmaceuticals 4.79 per cent.
Other standouts included Tyro Payments +10.29 per cent, Imugene +9.38 per cent and Megaport +6.99 per cent. Online beauty products retailer Adore bounced 24.6 per cent from an all-time low.
Stockland was the pick of the property stocks, rising 4.38 per cent. GPT Group firmed 3.28 per cent, HomeCo 3.26 per cent and HomeCo Daily Needs 3.12 per cent.
Takeover target Link Administration Holdings climbed 7.88 per cent after a recovery in the share price of Canadian suitor Dye & Durham. Link shares collapsed from above $5 on Tuesday to $4.04 yesterday amid questions over whether the acquisition would proceed.
Fuel refiners Ampol and Viva Energy rallied after trading updates yesterday underlined a huge improvement in margins last month. Ampol gained 1.63 per cent. Viva Energy jumped 5.08 per cent.
At the heavyweight end of the market, Macquarie Group rallied 3.79 per cent from a two-month low. Wesfarmers rose 2.71 per cent, CSL 2.22 per cent and Telstra 1.94 per cent.
Going down
The gold sub-sector sank to its lowest since mid-February after the yellow metal hit a three-month low. Newcrest declined 1.34 per cent, Evolution Mining 1.01 per cent and Sandfire 0.61 per cent.
Gold Road Resources announced it had moved closer to acquiring ASX-listed DGO Gold after increasing its stake in its target to 20.35 per cent. Gold Road shares eased 3.12 per cent. DGO dropped 6.74 per cent.
An earnings downgrade pulled packager Pro-Pac down 19.91 per cent. The group said results since early April had been below expectations, due to rising costs, labour shortages and bottlenecks in Asia and Europe. Full-year underling profit is expected to be around $5 million.
Other markets
US equity futures overcame early weakness as Asian markets rebounded. S&P 500 futures rose 28 points or 0.7 per cent.
In Asia, the Asia Dow put on 1.59 per cent, China’s Shanghai Composite 0.5 per cent, Hong Kong’s Hang Seng 2 per cent and Japan’s Nikkei 2.57 per cent.
Oil resumed its bull run after a brief pause overnight. Brent crude climbed US$1.52 or 1.4 per cent to US$108.97 a barrel.
Gold remained under pressure near a three-month low, easing 90 US cents or 0.05 per cent to US$1,823.70 an ounce.
The dollar edged up 0.2 per cent to 68.82 US cents.