Energy drags ahead of OPEC+ meeting, Inflation weighs on Domino's & Inghams: ASX closes 0.5% higher

Market Reports

by Melissa Darmawan

The Australian sharemarket stayed in positive territory looking like it was about to lose steam in the early afternoon before rallying to close 0.5 per cent or 35 points higher at 7,428 for its second day in a row.

The local bourse picked up a strong lead from Wall St as the major indexes reset record highs after the Federal Reserve unveiled its tapering intentions, shifting its view on inflation. For the break down on what the Fed said, click here.

Technology stocks fared well while energy stocks took a beating as the worst performer which was no surprise, given that oil prices tumbled overnight by almost 5.0 per cent after US data showed a larger-than-expected rise in output last week. This saw energy stocks around the globe close in the red. The moves come ahead of OPEC+ alliance who are set to meet with oil supply expected to remain unchanged.

This saw Woodside Petroleum (ASX:WPL) drop 2.7 per cent, Beach Energy (ASX:BPT) tumbled 5.2 per cent while Santos fell (ASX:STO) 3.1 per cent and Oil Search (ASX:OSH) closed 2.8 per cent lower.

Afterpay (ASX:APT) jumped 2.4 per cent to $124.38 after shareholders in US payments giant Square voted in favour to acquire the BNPL Aussie company. In August, the $39 billion deal consisted of a scrip offer from Square, where 0.375 Square shares for each Afterpay share was offered at an implied price of $127.24 for each Afterpay share based on Wednesday’s night closing price.

Domino's Pizza (ASX:DMP) crashed 18.4 per cent to $116.12 after investors reacted to the trading update after market close yesterday. The fast-food chain's update noted the "uneven" sales growth performances across its operating regions in the first 18 weeks of financial year 2022 with a particular mention to the Japanese market. Domino said that the strength of the Australian dollar meant that the offshore earnings deposited into the local accounts came in lower. They also flagged headwinds from rising electricity and gas prices along with a rise in food costs.

Chicken group Inghams (ASX:ING) tumbled 5.0 per cent at $3.60 after the company also flagged inflation worries. The company said that feed costs increased above previous expectations due to the northern hemisphere drought, an uplift in global demand and higher transport costs. Inghams flagged that input cost pressures could place upward pressure on market pricing.

NIB Holdings (ASX:NHF) surged 5.8 per cent after the health and travel insurer reported an 8.5 per cent rise in first-quarter financial year 2022 premium revenue. Investors looked past the severe lockdown restrictions and its impact on its travel insurance arm.

Suncorp (ASX:SUN) received around 12,000 home and motor claims from people living in South Australia, Victoria and Tasmania who experienced the recent hail and wind event last Thursday and Friday. The full extent of the damage is still unfolding, though claims are expected to rise. The insurer expects the total cost from this weather event to be in the ball-park of $225 to $250 million. Shares fell nearly 1.0 per cent on the news but closed 2.2 per cent higher at $11.60.

Elsewhere, steel distributor Vulcan Steel (ASX:VSL) rose 0.7 per cent to $7.15 after making its debut on the local bourse. The company listed at $7.10 a share after raising $371.6 million.

Investors will be looking to Wall St to US Challenger job cuts report and the weekly jobless claims ahead of the closely watched jobs report which keeps the Fed on its toes.

Local economic news

Exports fell 6.0 per cent to $44.9 billion driven by falls in iron ore prices while imports declined 2.0 to $32.7 billion driven by continued global supply chain constraints as per the Australian Bureau of Statistics. A fall of 5.0 per cent and 0.5 per cent was expected respectively.

Australian retail sales volumes fell a record 4.4 per cent in the September quarter seasonally adjusted, according to the Bureau of Statistics following a 0.7 per cent rise in the June quarter. This weakness was somewhat in line with expectations of 4.5 per cent and 5.0 per cent.

Futures

The Dow Jones futures are pointing to a fall of 11 points.
The S&P 500 futures are pointing to a rise of 2 points.
The Nasdaq futures are pointing to a rise of 35 points.
The SPI futures are pointing to a rise of 40 points when the market next opens.

Best and worst performers

The best-performing sector was Information Technology, up 1.2 per cent. The worst-performing sector was Energy, down 2 per cent.

The best-performing stock in the S&P/ASX 200 was Nufarm (ASX:NUF), closing 5.8 per cent higher at $4.94. It was followed by shares in NIB Holdings (ASX:NHF) and Chalice Mining (ASX:CHN).

The worst-performing stock in the S&P/ASX 200 was Domino Pizza Enterprises (ASX:DMP), closing 18.4 per cent lower at $116.12. It was followed by shares in Beach Energy (ASX:BPT) and Inghams Group (ASX:ING).

Asian markets

Japan's Nikkei has gained 0.7 per cent.
Hong Kong's Hang Seng has gained 0.3 per cent.
China's Shanghai Composite has gained 0.6 per cent.

Commodities and the dollar

Gold is trading at US$1775.63 an ounce.
Iron ore is 3.4 per cent higher at US$99.70 a ton.
Iron ore futures are pointing to a rise of 0.1 per cent.
Light crude is trading $0.78 lower at US$80.08 a barrel.
One Australian dollar is buying 74.49 US cents.

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