Zip Co jumps 9%, RBA holds rates: ASX closes 1% higher

Market Reports

by Lauren Evans

The Australian sharemarket lifted higher in the afternoon session, while the Reserve Bank kept rates on hold at 0.1 per cent and brushed away concerns about the Omicron variant. At the closing bell, the S&P/ASX 200 was 0.95 per cent or 69 points higher at 7,314.

Every sector closed in the green, except utilities, edging 0.1 per cent lower. Energy was the best performer, up 2.1 per cent, followed by health care, up 1.8 per cent, then information technology and consumer discretionary, both up 1.6 per cent.

Energy stocks rose in the late afternoon boosted by a rally in global oil prices. Santos (ASX:STO) and Oil Search (ASX:OSH) closed 2.4 and 3.8 per cent higher, following shareholder approval for its proposed merger. Heavyweight miners also made a comeback in the afternoon, led Fortescue Metals (ASX:FMG) closing 2.2 per cent higher.

Health stocks lifted as CSL (ASX:CSL) closed 2.1 per cent higher and Polynovo (ASX:PNV) closed 6.9 per cent higher. Meanwhile, wagering giant PointsBet (ASX:PBH ) closed 9.9 per cent as the best performing stock, despite no official company news released today.

Travel stocks rallied as Omricon fears eased. Qantas (ASX:QAN) closed 3.7 per cent higher, Flight Centre (ASX:FLT) closed 5.5 higher and Corporate Travel Management (ASX:CTD) closed 6 per cent higher. 

In headlines today, Magellan Financial Group (ASX:MFG) fell 5.6 per cent after news broke that its chief executive officer Brett Cairns will resign. Bank of Queensland (ASX:BOQ) closed 4.3 higher despite a warning that its operating profit margin is set to come under pressure. Zip Co (ASX:Z1P) jumped 9.5 per cent after reporting positive transaction volumes in November. 

Major banks closed higher, led by ANZ (ASX:ANZ) up 1.3 per cent.
 
Local economic news

ANZ and Roy Morgan released their weekly consumer confidence, which increased 1.5 points to 107.5 on the first weekend of December. as vaccination rates continue to rise. Consumer confidence is below the 2021 weekly average of 108.1 and now 1.5 points below the same week a year ago, December 7/8, 2020 (109.0).

Consumer confidence this week was up in NSW, Queensland and WA, but saw small reductions in Victoria, SA and Tasmania. This week’s small increase was driven by Australians becoming more confident about their personal financial situations.

Australian Bureau of Statistics released the property price index results for the September quarter. The weighted average of the eight capital cities residential property price index rose 5 per cent this quarter and rose 21.7 per cent over the last twelve months.

The total value of residential dwellings in Australia rose $487 billion to $9,259.2 billion this quarter, and the mean price of residential dwellings rose $42,000 to $863,700.

The Reserve Bank of Australia (RBA) met this afternoon for their final meeting this year. The board decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at 0 per cent. The RBA will also continue to purchase government securities at the rate of $4 billion a week until at least mid-February 2022.

In RBA's monetary policy statement, they said the Australian economy is recovering from the setback caused by the Delta outbreak. High rates of vaccination and substantial policy support are underpinning this recovery. Household consumption is rebounding strongly and the outlook for business investment has improved.

The emergence of the Omicron strain is a new source of uncertainty, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022.

Company news

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Insurance Australia Group (ASX:IAG) has used a strategy update to reaffirm its FY22 guidance for gross written premium growth in the low single digits and an insurance margin of 10-12 per cent.

Metal recycling company Sims (ASX:SGM) has acquired the assets of Brisbane based metal recycler, Recyclers Australia for $18 million.

Magellan’s (ASX:MFG) chief executive officer Dr Brett Cairns is slated to step down due to personal reasons and chief financial officer Kirsten Morton will step in for the meantime.

Bank of Queensland (ASX:BOQ) cuts net interest margin (NIM) guidance following a business performance update ahead of its annual general meeting.

Buy now, pay later giant Zip Co (ASX:Z1P) has reported strong momentum in November, achieving a monthly transaction volume of $906.5 million, up 52 per cent year-on-year.

Cimic's (ASX:CIM) subsidiary Thiess has secured two mining services contracts in Queensland with a combined revenue of around $200 million.

Futures

The Dow Jones futures are pointing to a rise of 136 points.
The S&P 500 futures are pointing to a rise of 16 points.
The Nasdaq futures are pointing to a rise of 44 points.
The SPI futures are pointing to a rise of 21 points when the market next opens.

Best and worst performers

The best-performing sector was Energy, up 2.1 per cent. The worst-performing sector was Utilities, down 0.1 per cent.

The best-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH), closing 9.9 per cent higher at $7.31. It was followed by shares in Zip Co (ASX:Z1P) and PolyNovo (ASX:PNV).

The worst-performing stock in the S&P/ASX 200 was Magellan Fin Group (ASX:MFG), closing 6.4 per cent lower at $29.10. It was followed by shares in Nickel Mines (ASX:NIC) and Lynas Rare Earths (ASX:LYC).

Asian markets

Japan's Nikkei has gained 2.1 per cent.
Hong Kong's Hang Seng has gained 1.6 per cent.
China's Shanghai Composite has gained 0.04 per cent.

Commodities and the dollar

Gold is trading at US$1777.96 an ounce.
Iron ore is 1.9 per cent higher at US$100.40 a ton.
Iron ore futures are pointing to a rise of 8.65 per cent.
Light crude is trading $0.77 higher at US$70.26 a barrel.
One Australian dollar is buying 70.81 US cents.


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