ASX rises ahead of Federal Budget as stocks perform, closes 0.7% higher

Market Reports

by Melissa Darmawan

The local bourse posted its sixth straight day of gains, its best rally for 2022, rising above concerns on recession risks as investors await the Federal Budget to be handed down tonight.

Aussie stocks touched a 11-week high as tech shares erased this week’s losses, offsetting weakness in energy, and material stocks.

Federal budget

Cost of living relief is set to be in focus in the countdown to the May federal election after Scott Morrison’s government pledged that it will roll out policies addressing pricing pressures, while repairing the country’s finances.

The federal government has earmarked an additional $60 million investment to bring back international visitors to the regions hardest hit by international border closures.

Flight Centre Travel (ASX:FLT) took off today by 4 per cent at $19.93, shares in Corporation Travel (ASX:CTD) added 1.8 per cent at $23.87, while Webjet (ASX:WEB) closed 1.1 per cent higher to $5.63. This helped lift the consumer discretionary sector as the second best performer of the session today.

New specialised endometriosis and pelvic pain clinics is set to be established in every state and territory to improve diagnosis, care and treatment to support over 800,000 Australian women who have the disease, as part of the Morrison Government’s funding package. Also, the government aims to also help couples plan for their pregnancy by investing $81.2 million to create a new Medicare item to support access to genetic testing for three serious genetic conditions.

Healthcare stocks were the third best performer and outside Telix Pharmaceuticals’ (ASX:TLX) news that the US Food and Drug Administration granted Orphan Drug Designation for TLX66 (90Y-besilesomab) for conditioning treatment prior to hematopoietic stem cell transplant, which saw the stock close as the best performer of the session, Healius (ASX:HLS) rose 0.2 per cent to $4.40 while Virtus Health (ASX:VRT) closed 1.1 per cent higher to $8.10.

Amid a proposed investment of $480 million, recognising the importance of investing in critical infrastructure such as the NBN to meet the demands of the economy and help reach the nation’s goal of becoming a top ten data and digital economy by 2030, Telstra (ASX:TLS) jumped 1.6 per cent to $3.93 while TPG (ASX:TPG) closed 0.9 per cent higher to $5.70.

Stocks we are watching

Wilsons 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 closed 1.9 per cent to $3.29.

Sims (ASX:SGM) hosted its investor day today, closing 1 per cent higher to $21.50. 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+', all three major lenders closed higher.

Westpac led the circle, up 1.1 per cent to $24.29, followed by National Australia Bank (ASX:NAB) gained 0.6 per cent to $32.10 with Commonwealth Bank (ASX:CBA) adding the least, up 0.2 per cent. Macquarie Group (ASX:MQG) added 1.1 per cent to $24.29 while ANZ Bank (ASX:ANZ) closed 0.3 per cent higher.

News of Janus Henderson’s (ASX:JHG) chief investment officer retiring saw the share price close 0.3 per cent higher to $46.44.

Russia and Ukraine to meet for peace talks, lifting sentiment

Elsewhere, market participants continue to monitor the war in Ukraine as diplomats between Russia and Ukraine are set to meet in Turkey’s capital of Istanbul tonight in its fourth round of peace talks, lifting investor's sentiment as European markets gain amid this note.

The month-long war has seen Russian forces stall amid news that the mayor of Irpin, a northwestern Kyiv suburb, had been “liberated” from Russian troops, according to The Associated Press. Zelenskyy warned that Russian forces are trying to regroup after losing the area.

On this backdrop, crude prices continue to fall amid concerns that a crimp in China’s demand as 25 million residents go into lockdown.

At the closing bell, the S&P/ASX 200 was 0.7 per cent or 52 points higher at 7,464.

Local economic news

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.

However, 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

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 closed 1.4 per cent lower to $116.84.

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 closed 1.7 per cent lower to $4.64.

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 closed 3.1 per cent lower to 15.5 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 closed flat at 69 cents.

Nearmap (ASX:NEA) surged 16.6 per cent to $1.51, following a trading update from the aerial imagery company which reaffirmed that it expects the group annual contract value portfolio to close financial year 2022 at the upper end of the $150 million to $160 million guidance range. This comes as the company hit a financial milestone, achieving an annual contract value of $150 million for its group portfolio for the first time.

Sigma Healthcare (ASX:SIG) posted a 1.3 per cent rise in revenue to $3.4 billion in the year ending January 31. The company’s EBITDA fell 56.3 per cent to $30 million and it reported a statutory net loss of $7.2 million, down from a $43.5 million profit in the financial year 2021. Sigma attributed its performance to “costs incurred to strengthen the Sigma business for sustained growth and operational efficiency in the years ahead”. A fully franked final dividend of 1 cent per share was declared, bringing the total dividend for the year to 2 cents per share, fully franked and the company did not provide a specific guidance for financial year 2023. Shares jumped 1.9 per cent to 53 cents.

Broker moves

Macquarie upgraded Gold Road Resources (ASX:GOR) to neutral from underperform and retained its price target of $1.70. The moves followed the company’s profit of $7.6 million and final fully-franked dividend of 0.5 cents per share, coming in higher than what the broker expected after the release of its financial year 2021 results. Shares closed 2.2 per cent higher to $1.65.

Futures

The Dow Jones futures are pointing to a rise of 49 points.
The S&P 500 futures are pointing to a rise of 6 points.
The Nasdaq futures are pointing to a rise of 1 point.
The SPI futures are pointing to a rise of 61 points when the market next opens.

Best and worst performers

The best-performing sector was information technology, up 3.3 per cent. The worst-performing sector was energy, down 0.6 per cent.

The best-performing stock in the S&P/ASX 200 was Telix Pharmaceuticals (ASX:TLX), closing 9.9 per cent higher at $4.56. It was followed by shares in Magellan Financial Group (ASX:MFG) and Block (ASX:SQ2).

The worst-performing stock in the S&P/ASX 200 was Whitehaven Coal (ASX:WHC), closing 4.3 per cent lower at $4.25. It was followed by shares in GrainCorp (ASX:GNC) and Worley (ASX:WOR).

Asian markets

Japan's Nikkei has gained 0.7 per cent.
Hong Kong's Hang Seng has gained 0.5 per cent.
China's Shanghai Composite has lost 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1923.41 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 1.2 per cent.
Light crude is trading $0.86 lower at US$105.10 a barrel.
One Australian dollar is buying 74.85 US cents.

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