Banks, miners lift ASX, Best performance for the year: Aus shares closed 1.9% higher

Market Reports

by Melissa Darmawan

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The Australian sharemarket had a stellar day closing 1.9 per cent or 136 points higher at 7,332. Investors shrugged off inflation and global concerns and piled back into stocks in a bid to offset the losses from the past few days. Despite the concerted efforts, the local bourse capped off its best day for the year and snapped its 11-month winning streak, closing 2.6 per cent lower for the month.

The gains were across the board with consumer staples loving the limelight, as the best performing sector closing 2.7 per cent higher. Materials, healthcare, energy, and financials closed over 2 per cent higher. Not a shade of red was seen with utilities adding the least, up 0.3 per cent.

Optimism was boosted with iron ore and Wall St futures in the black ahead of the national week long holiday in China. The Hang Seng will be closed tomorrow while the Shanghai Composite will be closed for a week.

A couple of stock standouts, Orica (ASX:ORI) closed 14.5 per cent higher on the back of a broker upgrade. The moves followed the explosives company’s announcement this week that it expects ammonium nitrate volumes to stay within profit guidance. Check out broker moves below to see what it’s all about.

Blue chip bulls charged ahead with Woolworths (ASX:WOW), surged 2.8 per cent, Westpac (ASX:WBC), Transurban (ASX:TCL), and BHP (ASX:BHP) all rocketed over 3.3 per cent.

Fortescue Metals (ASX:FMG) suspended operations at their Solomon Hub in Pilbara after a serious incident. The miner is working with WA Police and WA mining watchdogs pending a full investigation. Shares closed 1.1 per cent higher at $14.96.

Oil Search (ASX:OSH) dropped the joint venture announced in December last year. The initial plan was to redetermine interests in the PNG Liquified Natural Gas joint venture with ExxonMobil, Santos, the PNG Government and its communities. Shares closed 1.9 per cent higher at $4.36.

Local economic news

Private sector credit rose 0.6 per cent versus the expectations of 0.7 per cent as per Westpac group economists, as covered this morning as per the Reserve Bank. Over the year, it rose 4.7 per cent vs 4.6 per cent that was expected, accelerating to its highest level since May 2018.

Job vacancies fell by 10 per cent between May and August however, remained 46 per cent above pre-pandemic levels according to new seasonally adjusted figures from the Australian Bureau of Statistics (ABS).

The number of dwellings approved rose 6.8 per cent in August, seasonally adjusted, ending a run of four consecutive monthly declines, according to the ABS.

Company news

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Buy-now pay-later Zip Co (ASX:Z1P) has joined forces with tech-titan Microsoft, as the Wall St-listed software provider is set to integrate the buy-now pay-later’s technology into their shopping experience Microsoft Edge.

South32 (ASX:S32) are set to creep up their stake in Mozal Aluminium in Mozambique by 25 per cent to 72.1 per cent for US$250 million. The miner will deplete their US$553 million bank balance as of August to settle the deal.

Medical imaging services Integral Diagnostics (ASX:IDX) has put in a offer to acquire the X-Ray Group for up to $37.5 million.

Broker moves

Credit Suisse rates Orica (ASX:ORI as an outperform with a price target of $16.11. Upon review of their FY21 trading update, the broker observed that the impairments to Burrup and their Europe, Middle East and Africa division hadn’t tainted the company’s outlook.

The broker believes that the volume is possibly stronger and impacts to ammonia costs are not as material than previously expected.

Credit Suisse sees that the cost of gas and ammonia are likely to remain a headwind through to mid next year, the pass through of costs through contracts is likely to recover in the second half of next year.

The broker retains its outperform rating and lifts its target price to $16.11 from $15.66.

Shares in Orica (ASX:ORI) are trading 14.8 per cent higher at $13.83.

Futures

The Dow Jones futures are pointing to a rise of 218 points.
The S&P 500 futures are pointing to a rise of 31 points.
The Nasdaq futures are pointing to a rise of 118 points.
The SPI futures are pointing to a rise of 118 points when the market next opens.

Best and worst performers

The best-performing sector was Consumer Staples, up 2.7 per cent. The sector with the fewest gains was Utilities, up 0.3 per cent.

The best-performing stock in the S&P/ASX 200 was Orica (ASX:ORI), closing 14.5 per cent higher at $13.79. It was followed by shares in Beach Energy (ASX:BPT) and Codan (ASX:CDA).

The worst-performing stock in the S&P/ASX 200 was Pinnacle Investment (ASX:PNI), closing 3.5 per cent lower at $15.72. It was followed by shares in AusNet Services (ASX:AST) and AGL Energy (ASX:AGL).

Asian markets

Asian markets closed mixed. Tokyo’s Nikkei fell 0.3 per cent, Hong Kong’s Hang Seng lost 0.4 per cent and China’s Shanghai Composite added 0.9 per cent.


Commodities and the dollar

Gold is trading at US$1730.18 an ounce.
Iron ore is 1.8 per cent higher at US$114.13 a ton.
Iron ore futures are pointing to a rise of 5.6 per cent.
Light crude is trading $0.12 higher at US$74.95 a barrel.
One Australian dollar is buying 72.12 US cents.

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