Commodities seen as inflation hedge, pushes ASX higher for March by 5.7%, though 0.2% lower today

Market Reports

by Melissa Darmawan

As investors thought an eight day rally was on the cards, the closing match at 4.10pm wiped off that dream as the transaction pulled the local bourse into the red to close off the month.

Quarterly rebalancing was in sight with a massive order which slipped through in a phase where designated traders tidy up orders before an algorithm is run before they call it a day.

Before then, the local bourse defied a weak lead from Wall Street where the S&P 500 snapped its four day winning streak as Russia's attacks on Ukraine continued to persist even after the military promised to scale back operations in several areas, including the capital of Kiev which helped lift the index higher by 0.5 per cent.

The resilience of the market continued despite the news that broke before midday that the Biden administration is mulling on releasing 180 million barrels of oil in coming months from the strategic petroleum reserve to combat rising fuel prices. This comes ahead of the OPEC+ meeting tonight where the alliance is expected to stick to the plan to add 400,000 barrels per day into the market.

This drilled the energy sector into the red with Woodside Petroleum (ASX:WPL) fell 1.4 per cent to $32.10, Beach Energy (ASX:BPT) lost 2.2 per cent to $1.55, while Santos (ASX:STO) closed 1.7 per cent lower to $7.74.

Though our biggest player on the local bourse, BHP (ASX:BHP) put in a solid effort, closing 2.3 per cent higher at $51.75. Fortescue Metals Group (ASX:FMG) jumped 4.3 per cent to $20.66 as investors piled into local mining giants amid rising interest rates as companies around the globe scramble for commodities and battery vehicle ingredients amid self-sanctioning from Russia exposure.

Elsewhere, US President Joe Biden flagged a production boost for critical minerals, giving a hand to lithium players with Mineral Resources (ASX:MIN) up 4.4 per cent to $52.71 and Novonix (ASX:NVX) surged 9.7 per cent to $6.20, taking home the title of the best performer of the session.

While coal miners Whitehaven Coal (ASX:WHC) and New Hope (ASX:NHC) rose up to 1.5 per cent while gold players like Newcrest Mining (ASX:NCM), and Evolution Mining (ASX:EVN) closed mixed.

In late afternoon trade, a note that Australia is set to impose a 35 per cent tariff on Russian imports seemed to have spooked investors just a bit after investors shrugged off a sharp rebound in building approvals data.

All major banks fell with Macquarie Group (ASX:MQG) leading the losses with a 1.9 per cent fall to $203.27 while National Australia Bank (ASX:NAB) bucked the trend and closed flat at $32.35.

Harvey Norman (ASX:HVN) was the worst performer as the company traded without its right to its dividend.

Tonight, investors look to the OPEC+ meeting with hopes that it will go for longer than 13 minutes amid this rocky backdrop to see if the moves from Washington are set to sway the alliance’s view to increase output.

At the closing bell, the S&P/ASX 200 was 0.2 per cent or 15 points lower at 7,500.

Local economic news

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).

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 closed 4.7 per cent lower to $5.32.

Goldman Sachs boosted Ramsay Health Care‘s (ASX:RHC) target price to $74 and retained its buy rating. Shares rose 0.6 per cent higher to $65.15.

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 closed 1.5 per cent lower to $14.29.

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 closed 1.9 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 closed 1 per cent lower to $5.21.

Futures

The Dow Jones futures are pointing to a rise of 11 points.
The S&P 500 futures are pointing to a rise of 6 points.
The Nasdaq futures are pointing to a rise of 53 points.
The SPI futures are pointing to a fall of 5 points when the market next opens.

Best and worst performers

The best-performing sector was materials, up 1.5 per cent. The worst-performing sector was information technology, down 2.2 per cent.

The best-performing stock in the S&P/ASX 200 was Novonix (ASX:NVX), closing 9.7 per cent higher at $6.20. It was followed by shares in Champion Iron (ASX:CIA) and Mineral Resources (ASX:MIN).

The worst-performing stock in the S&P/ASX 200 was Harvey Norman Holdings (ASX:HVN), closing 6.3 per cent lower at $5.35. It was followed by shares in Reece (ASX:REH) and Block (ASX:SQ2).

Asian markets

Japan's Nikkei has lost 0.5 per cent.
Hong Kong's Hang Seng has lost 1 per cent.
China's Shanghai Composite has lost 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1922.00 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 2.8 per cent.
Light crude is trading $5.85 lower at US$101.97 a barrel.
One Australian dollar is buying 74.83 US cents.

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