Resources rally puts a glimmer on buoyant ASX, closes 1.3% higher

Market Reports

by Melissa Darmawan

The Australian sharemarket ended a three day losing streak as dip-buying mood was in action. The almost broad-based rally was led by mining and energy stocks with communication services as the outlier by just a touch.

At the closing bell, the S&P/ASX 200 was 1.3 per cent or 96 points higher at 7,357.

The Australian dollar tapped a two month low of 71.09 US cents from 71.27 US cents this morning amid the US futures pointing to an optimistic start, buoyed by the Meta beat, the owner of Facebook reporting after the closing bell on Wall St.

AMP (ASX:AMP) soared 13.2 per cent to $1.14 after flagging a capital return from its sale of Collimate Capital's international infrastructure equity business to US-based digital infrastructure firm DigitalBridge for up to $699 million or 8 per cent of assets under management. This means that AMP will no longer demerge its private markets arm which means separation costs are set to be immaterial. Analysts have said that its dividend yield could top 20 per cent in the company’s fiscal 2022 to 2023 years if it pays out the majority of net proceeds from its recent transactions which could hit $2 billion.

AMP is set to receive $462 million in upfront cash from the sale of those assets, an additional estimated $57 million performance fees payment, and up to $180 million, subject to future fund raising.

The announcement came after yesterday’s news that the wealth giant unveiled it was selling AMP Capital's real estate and domestic infrastructure equity business to Dexus for up to $550 million, meaning that once the deals are completed, the company is slated to focus solely on their domestic operations.

Meanwhile a 10 per cent rise in shipments from Fortescue Metals (ASX:FMG) for the March quarter has put the fourth largest iron ore miner to raise guidance for its annual exports, sending shares to close 8.1 per cent higher to $21.73, its best performance in five months recouping its losses from last week.

Shipments in the three months ending March were 46.5 million tons, up from 42.3 million tons in the same period a year ago attributed to the delivery and ramp up of the Eliwana project and execution of integrated operations, coming in line with estimates of 46 million tons. However, strong volumes and an ongoing focus on cost management were offset by market inflation across key input costs, including diesel, other consumables and labour rates.

This followed updates from BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO) both reporting a fall in iron ore shipments compared with the previous quarter on issues due to labour shortages, delaying projects. BHP jumped 4.4 per cent to $53.05 while Rio Tinto closed 3.6 per cent higher to $112.80.

One of the worst performers is Silver Lake Resources (ASX:SLR) after the gold and copper miner withdrew its 2022 sales guidance on the same issues reported by BHP and Rio Tinto - staff shortages due to the Covid-19 lockdowns.

Coles (ASX:COL) jumped 0.6 per cent to $18.47 after the supermarket giant posted a strong third quarter. Gross retail sales of $9.3 billion increased by 3.9 per cent while group sales revenue of $9.1 billion grew by 3.6 per cent compared to the prior period. The chief executive officer noted that price hikes are on the horizon as the supermarket giant is in talks with many suppliers about higher input costs around services like freight and logistics.

Japanese giant Mitsui & Co has started sounding out potential buyers for its oil and gas joint ventures with Woodside Petroleum (ASX:WPL), fuelling expectations of a potential divestment. Shares in Woodside closed 0.06 per cent lower at $30.89.

The Star Entertainment Group (ASX:SGR) allegedly underpaid $2.5 million in NSW state taxes in 2020 by failing to properly categorise gamblers as overseas for Australian residents, an inquiry into its suitability to hold a NSW casino licence heard, according to the AFR. Shares closed 0.3 per cent lower to $3.09.

Hearing implant maker Cochlear (ASX:COH) is sounding out global consolidation opportunities with a deal to acquire Danish competitor Oticon Medical for $170 million (DKK850 million), in a move that if successful would lift its patient base by 75,000 hearing implant recipients. Shares closed 0.6 per cent lower to $229.47.

Futures

The Dow Jones futures are pointing to a rise of 122 points.
The S&P 500 futures are pointing to a rise of 38 points.
The Nasdaq futures are pointing to a rise of 177 points.
The SPI futures are pointing to a rise of 94 points when the market next opens.

Best and worst performers

The best-performing sector was Materials, up 3.5 per cent. The worst-performing sector was Communication Services, down 0.1 per cent.

The best-performing stock in the S&P/ASX 200 was AMP (ASX:AMP), closing 13.2 per cent higher at $1.16. It was followed by shares in Sandfire Resources (ASX:SFR) and City Chic Collective (ASX:CCX).

The worst-performing stock in the S&P/ASX 200 was Paladin Energy (ASX:PDN), closing 6.7 per cent lower at $0.77. It was followed by shares in Silver Lake Resources (ASX:SLR) and PolyNovo (ASX:PNV).

Asian markets

Japan's Nikkei has gained 1.8 per cent.
Hong Kong's Hang Seng has gained 0.6 per cent.
China's Shanghai Composite has gained 0.02 per cent.

Commodities and the dollar

Gold is trading at US$1875.99 an ounce.
Iron ore is 1.1 per cent higher at US$140.45 a ton.
Iron ore futures are pointing to a rise of 1.9 per cent.
Light crude is trading $1.27 lower at US$100.75 a barrel.
One Australian dollar is buying 71.09 US cents.

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