Energy down, tech jumps, Morrison & Co sweetens Uniti deal: ASX taps 11-wk high, up 0.8% at noon

Market Reports

by Melissa Darmawan

Aussie stocks jumped to a near 11-week high, as tech shares erase 2-days of losses overshadowing weakness in energy, and material stocks while investors await the Federal Budget to be handed down. The local bourse is rallying for its sixth straight days, falling twice in the past 11 sessions in a week where $20.5 billion of dividends is to be paid to eligible shareholders.

Aussies continue to splurge in February, beating expectations

A beat in retail sales for February buoyed optimism coming in at 1.8 per cent versus expectations of 0.9 per cent as per the Australian Bureau of Statistics, keeping up with a 1.6 per cent rise in January as spending from the holiday season continues to prevail.

Spending in cafes, restaurants and takeaways surged 9.7 per cent for the month as Aussies pivot to spending on services while foot traffic in department stores galloped by 11.1 per cent as spending on clothing, footwear jumped in tandem by 11.2 per cent as businesses overcame staff shortages and closures from previous months to return to more normal trading conditions.

Following a strong lead from Wall St, information technology and consumer discretionary stocks are both outperformers on the ASX and Japan’s Nikkei.

Info tech leads, energy and mining stocks weak

A surge of 3.5 per cent in information tech with a 2.3 per cent jump in consumer discretionary, followed by property up 2.2 per cent after a slump in the oil price sent energy stocks as the worst performer by a soft 0.6 per cent while material stocks are trading 0.2 per cent lower.

Stocks we are watching

Onto the stocks that we are watching, Wilsons has upgraded Costa’s (ASX:CGC) rating to overweight from market-weight with a price target of $3.66, an increase of 16 per cent from yesterday’s closing price. Shares are flat at $3.13.

Sims (ASX:SGM) hosted its investor day today with shares on the move, up 0.3 per cent to $21.35. The metal recycler is set to benefit from the growing demand for recycled copper and aluminium. The company said that headwinds include labour costs, volatility in freight costs, and increased fuel prices are set to offset stronger commodity prices.

Amid Fitch Ratings affirming Commonwealth Bank of Australia (ASX:CBA), National Australia Bank’s (ASX:NAB), and Westpac’s (ASX:WBC) rating of 'A+', shares are moving higher. Westpac is leading by 1.3 per cent to $24.32 followed by Macquarie Group (ASX:MQG), up 1.2 per cent to $202.55 while ANZ (ASX:ANZ) is down 0.1 per cent lowe to $27.75.

News of Janus Henderson’s (ASX:JHG) chief investment officer retiring has seen the share price essentially hug the flat line, up 0.03 per cent to be precise to $46.33.

Other stock standouts include CSL (ASX:CSL) up 1.2 per cent to $264.97 and Block (ASX:SQ2) surged 7.2 per cent.

In Asian markets, the Japanese yen is around a six-year low against the greenback on the divergence between the hawkish Fed and dovish Japanese central bank, a currency that was historically seen as a safe haven.

SPI futures

At noon, the S&P/ASX 200 is 0.8 per cent or 62 points higher at 7,475.

The SPI futures are pointing to a rise of 72 points.

Local economic news

ANZ-Roy Morgan consumer confidence was virtually unchanged at 91.1 during the fourth week of March after dropping by 8.9 points over the previous two weeks.

Consumer confidence is now at its lowest since Victoria’s second wave of COVID-19 on September 5 2020.

Although consumer confidence was virtually unchanged there were drops in those saying now is a ‘good time to buy’ major household items which was largely offset by more Australians becoming confident about their personal financial situation over the next year.

Inflation expectations surged 0.4 percentage points last week to a multi-year high of 6.4 per cent, its highest weekly reading since June 2012 even though petrol prices declined slightly.

Company news

AMP shares (ASX:AMP) are up 0.7 per cent to 96.7 cents on news that John O'Sullivan is set to step down as a non-executive director from the board of AMP on April 8 to step into a role with Cromwell Property Group (AS:CMW). AMP previously announced he would conclude his roles on both the AMP Limited and AMP Bank boards at, or prior to, the Annual General Meeting to be held in May.

Telix Pharmaceuticals (ASX:TLX) announces that the US Food and Drug Administration grants Orphan Drug Designation for TLX66 (90Y-besilesomab), for conditioning treatment prior to hematopoietic stem cell transplant. Shares jumped 7.7 per cent to $4.47.

Rio Tinto (ASX:RIO) has completed the acquisition of the Rincon lithium project in Argentina for $825 million, following approval from Australia’s Foreign Investment Review Board. The private equity group Sentient Equity Partners, was announced in December 2021. Rincon is a large undeveloped lithium brine project located in the heart of the lithium triangle in the Salta Province of Argentina, an emerging hub for greenfield projects. The project is a long life, scalable resource capable of producing battery grade lithium carbonate. It has the potential to have one of the lowest carbon footprints in the industry. Shares are down 0.6 per cent to $117.75.

Uniti Group (ASX:UWL) has received a revised indicative proposal from a consortium comprising HRL Morrison & Co and Brookfield Infrastructure to acquire Uniti for cash consideration of $5 per share, via a scheme of arrangement. The terms of the revised proposal are generally the same as Morrison & Co’s previous bid, apart from the increased proposal price and the inclusion of Brookfield as a 50/50 partner. Uniti’s board said it’s in the best interests of shareholders to engage with the Morrison/Brookfield consortium on their revised proposal, and determined it isn’t able to engage with the Connect Consortium at this time. Shares are up 0.1 per cent to $4.72.

Fintech Wisr (ASX:WZR) has welcomed Kate Whitney, Marley Spoon Australia's chief marketing and growth officer to its board. Kate’s appointment follows the Wisr Board’s previously advised commitment to growing with appropriate talent as the Company accelerates its growth ambitions to deliver the short-term target of a $1 billion loan book. Shares are flat at 16 cents.

Sequoia Financial Group (ASX:SEQ) has unveiled its latest acquisition, following TopDocs now renamed Doscentre Legal in January. Informed Investor, Sharecafe, and Corporate Connect Research has joined the diversified financial group with the deal set to be complete by 1 April. Shares jumped 2.9 per cent to 71 cents.

Best and worst performers

The best-performing sector is information technology, up 3.5 per cent. The worst-performing sector is energy, down 0.6 per cent.

The best-performing stock in the S&P/ASX 200 is PolyNovo (ASX:PNV), trading 8.9 per cent higher at $1.16. It is followed by shares in Telix Pharmaceutical (ASX:TLX) and Block (ASX:SQ2).

The worst-performing stock in the S&P/ASX 200 is Whitehaven Coal (ASX:WHC), trading 3.9 per cent lower at $4.26. It is followed by shares in Ramelius Resources (ASX:RMS) and Iluka Resources (ASX:ILU).

Commodities and the dollar

Gold is trading at US$1921.98 an ounce.
Iron ore is 1.1 per cent higher at US$152.40 a ton.
Iron ore futures are pointing to a rise of 1.10 per cent.
One Australian dollar is buying 74.77 US cents.

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