Rio cut ties with Russia, RBA Debelle to join Fortescue: ASX up 0.9% at noon

Market Reports

by Melissa Darmawan

The bulls continue to unleash on the Australian sharemarket after yesterday’s rebound, following a global equity recovery, on track for its best surge in the past week.

After three rounds of diplomatic negotiation, the Ukrainian president said that he's prepared to compromise with Russia to end the war, though on a condition that Ukraine won’t capitulate for Moscow's request for Ukraine's territory, stimulating investor’s risk appetite that a truce is set to bring certainty on the cards.

Oil plunge weighs on energy stocks

Oil sank from recent record highs on reports that the United Arab Emirates will push for OPEC members to hike oil production, while gold prices fell with the commodities complex losing ground since the invasion started.

The news have weighed on energy and material stocks, both tumbling almost 3 per cent followed by utilities, and consumer staples as positive risk sentiment drive gains. Information tech continued its rally for the second day, up around 4 per cent with consumer discretionary and financials also in the winners circle.

RBA takes spotlight

Following governor Philip Lowe’s focus for the jobless rate to fall below four per cent later this year, payroll jobs rose 0.8 per cent in the fortnight to 12 February and were 1.8 per cent higher the same time a year earlier, according to the Australian Bureau of Statistics. The figures show that the labour market is moving in the right direction ahead of the February labour force figures next week.

Investors are also mulling on news from the central bank with the Reserve Bank deputy governor Guy Debelle is set to leave as of Wednesday next week to start at Fortescue Metals (ASX:FMG) as chief financial officer of Fortescue Future Industries in June. Shares are down 2.5 per cent to $18.36 amid the decline in the iron ore price.

Rio & Worley exits dealing with Russia

Rio Tinto (ASX:RIO) is trading without the rights to its dividend today, paying shareholders its best payout. Amid several companies going ex-dividend, the mining giant also unveiled its plans to cut ties in conducting any Russian business. Shares are down 7.5 per cent to $110.92.

Worley (ASX:WOR) has also followed suit with several global companies, withdrawing its services provided in and into Russia and has pledged that it will not enter into new contracts with the country. The cut in the company’s exposure won't have a material impact to its global business. Shares are on the move, up 0.2 per cent to $12.58.

Myer resumes dividend

Meanwhile, shares in Myers (ASX:MYR) skyrocketed to 20 per cent to 49 cents after reinstating its dividend for the first time since 2017 at its half-year results. The retail giant posted sales growth of 8.5 per cent to $1.52 billion in the six months to 29 December 2021, net cash rose by $16 million to $217 million and its net profit after tax was 55.2 per cent higher, coming in at $32.3 million, adjusted for the net JobKeeper benefit of $22 million in the first half of 2021.

Buy now, pay later player Sezzle (ASX:SZL) is set to cut 20 per cent of its staff in North America, sending its shares higher by 8.2 per cent to $1.58. The moves come after the company accepted an all-scrip merger with Zip Co (ASX:Z1P).

Chinese nickel trader set to weigh on Nickel Mines’ reputation

Amid the London Metals Exchange, halting the trade of nickel, adding further pressure are several broker downgrades for Nickel Mines (ASX:NIC). The share price has tumbled 13.8 per cent to $1.21. Credit Suisse has cut its rating to neutral from outperform with its target price at $1.35 from $1.74. The company’s largest shareholder and customer, Tsingshan Holdings has apparently secured credit agreement to cover the cost margin requirements though Nickel’s reputational damage is set to weigh, given its relationship with Tsinghshan.

Elsewhere, Asian markets are also flying higher with Japan’s Nikkei rebounding after four sessions of losses while the Kospi is having its best day in three weeks. 

At noon, the S&P/ASX 200 is 0.9 per cent or 66 points higher at 7,119.

The SPI futures are pointing to a rise of 73 points.

Best and worst performers

The best-performing sector is information technology, up 3.8 per cent. The worst-performing sector is energy, down 2.6 per cent.

The best-performing stock in the S&P/ASX 200 is Paladin Energy (ASX:PDN), trading over 11 per cent higher at $0.85. It is followed by shares in Block (ASX:SQ2) and Unibail-Rodamco-Westfield (ASX:URW).

The worst-performing stock in the S&P/ASX 200 is Nickel Mines (ASX:NIC), trading 12.1 per cent lower at $1.24. It is followed by shares in Beach Energy (ASX:BPT) and Rio Tinto (ASX:RIO).

Commodities and the dollar

Gold is trading at US$1,982.39 an ounce.
Iron ore is 2.9 per cent lower at US$157.55 a ton.
Iron ore futures are pointing to a fall of 8.2 per cent.
One Australian dollar is buying 73.07 US cents. 

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