Energy stocks dims, US mulls tapping SPR again, ASX up 7% for month, trading up 0.4% at noon

Market Reports

by Melissa Darmawan

Aussie stocks were on a tear supported by the rally in the commodities complex, lifting the local bourse higher to a fresh three month high as we close off the month and the quarter.

Though optimism faded amid news that President Biden is set to speak about energy supplies and inflation tomorrow, following news that the US is mulling on a plan to release roughly a million barrels of oil a day from its reserves for several months to combat rising fuel prices according to Bloomberg, sending NYMEX down by 5 per cent. This comes ahead of the OPEC+ meeting where the alliance is expected to stick to the plan to add 400,000 barrels per day into the market.

On the rocky backdrop is the lockdown in China where demand for oil poses concerns as 25 million residents are locked down, including ports and financial trading distribution centres as Beijing maintains a zero-covid policy. The upcoming China’s purchasing managers' index is set to contract amid this, a proxy to the state of the economy.

Energy stocks pare gains, miners pull index higher

The energy sector pared back gains after a buoyant start with shares in Woodside Petroleum (ASX:WPL) down 0.7 per cent at $32.32, while Santos (ASX:STO) closed 0.8 per cent lower at $7.81.

Despite the dampening in mood, the bulls are marginally pacing higher for its eighth straight day. However, the biggest movers are still out in front.

Fortescue Metals Group (ASX:FMG) popped 4.4 per cent higher at $20.68, BHP Group (ASX:BHP) is up 2.9 per cent at $52.06, while Rio Tinto (ASX:RIO) is trading 1.9 per cent higher at $119.15.

Banks are mixed National Australia Bank (ASX:NAB) is up 0.2 per cent at $32.43, while the other major lenders are trading 0.4 per cent lower each.

Dwelling approvals sharply rebounds

Meanwhile, investors shrugged off the total number of dwellings approval which rose 43.5 per cent in seasonally adjusted terms in February, following a 27.1 per cent plunge in January, outperforming the 10 per cent that was expected, according to the Australian Bureau of Statistics (ABS).

While there were 423,000 job vacancies in February, 27,000 more than November 2021 according to new seasonally adjusted figures from the ABS.

Private sector credit in Australia rose by 0.6 per cent in February from the month before, the same pace as in January which was the softest pace in three months. Housing credit growth eased to 0.6 per cent from 0.7 per cent the month before, while business credit grew to 0.8 per cent from 0.6 per cent.

Stocks we are watching

Jefferies cut Aussie Broadband’s (ASX:ABB) rating to a hold with a price target of $5.60. Shares are trading 6.5 per cent lower to $5.22.

Goldman Sachs boosted Ramsay Health Care‘s (ASX:RHC) target price to $74 and retained its buy rating. Shares are flat at $64.79.

Ords raised the target price of Eagers Automotive (ASX:APE) to $17.50 with a buy rating. The broker notes that the $205 million proposed transaction will be immaterial, however it under-represents the longer-term strategic value from the deal like the potential creation of a true national footprint. Shares are trading 1.5 per cent lower to $14.29.

SPI futures

In Asian markets, Japan’s Nikkei is trading lower, tracking Wall St’s performance.

At noon, the S&P/ASX 200 is 0.4 per cent or 27 points higher at 7,542.

The SPI futures are pointing to a rise of 28 points.

Company news

Bell Financial Group's (ASX:BFG) first quarter before-tax profit has been estimated to fall 30 per cent to $8.3 million with revenue forecast down also by 13 per cent to $57 million, compared to the prior corresponding period. However, funds under advice are estimated to come in at $77 billion, up 1.4 per cent on 31 December. Shares are trading 1.5 per cent lower to $1.30.

Qantas (ASX:QAN) has outlined its plans to reduce carbon emissions by 25 per cent over the next eight years in a climate action plan. The flying kangaroo has pledged $50 million in creating a sustainable aviation fuel industry, and is calling on all levels of government to also lend support to ensure Australia manufactures the biofuel like the UK, US and Europe already are. Shares are trading 0.2 per cent higher to $5.27.

Paladin Energy (ASX:PLD) is in a trading halt pending the release of an announcement by the company regarding a proposed capital raising.

Best and worst performers

The best-performing sector is materials, up 1.7 per cent. The worst-performing sector is information technology, down 1.4 per cent.

The best-performing stock in the S&P/ASX 200 is Novonix (ASX:NVX), trading 7.3 per cent higher at $6.06. It is followed by shares in Whitehaven Coal (ASX:WHC) and Champion Iron (ASX:CIA).

The worst-performing stock in the S&P/ASX 200 is Harvey Norman Holdings (ASX:HVN), trading 5.1 per cent lower at $5.42. It is followed by shares in James Hardie Industries (ASX:JHX) and Block (ASX:SQ2).

Commodities and the dollar

Gold is trading at US$1931.15 an ounce.
Iron ore is 3.4 per cent higher at US$158.20 a ton.
Iron ore futures are pointing to a rise of 4.72 per cent.
One Australian dollar is buying 75.13 US cents.

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