The ASX has again gained ground, with the benchmark index returning above 7500 points and travel stocks among the winners. The Australian sharemarket ended in positive territory for the second straight day, with travel and oil stocks surging, while an online retailer copped a battering for its full-year results.
The S&P/ASX200 firmed 0.17 percent to 7503 while the All Ordinaries Index added 0.16 percent to 7773.7. CommSec analyst James Tao said it followed some decent improvements on Wall Street overnight, with the tech-heavy Nasdaq the standout.
Ord Minnett said the index climbed to an all-time high as investor sentiment was boosted by full FDA approval of the Pfizer Covid-19 vaccine and the prospect of reluctant Americans being willing to now get their shot.
Mr. Tao said resources stocks were strong performers on the back of higher commodity prices overnight, particularly oil, up more than 5 percent. “One of its best sessions in about six months, and that’s certainly helping our local producers,” Mr. Tao said.
Woodside gained 3.2 percent to $20.31, Origin lifted 3.04 percent to $4.40, Oil Search rose 2.97 percent to $3.81, and its suitor Santos appreciated 3.19 percent to $6.14. Oil Search booked a significant turnaround in first-half results, with a net profit of $US139m ($A192m) compared to a net loss of $US266.2m ($A368m) for the same period last year.
Acting chief executive Peter Fredricson said the company was on track to meet its production and cost guidance. RBC Capital Markets analyst Gordon Ramsay described the results as promising, noting Oil Search had made progress reducing overheads.
While the iron ore price continued to slide, Rio Tinto put on 1.32 percent to $108.10, BHP added 1.04 percent to $44.92, and Fortescue firmed 1.39 percent to $19.76. S&P Global Ratings put BHP on credit watch negative, warning it could lower its ratings for the mining giant by up to two notches in coming months.
“BHP’s recently announced agreement to pursue a merger of its oil and gas assets with Woodside Petroleum, and distribute its shares in the merged company to its shareholders, may result in a less diversified portfolio, with increased reliance on iron ore,” the rating agency said.
Qantas jumped 5.48 percent to $4.62, Webjet advanced 6.48 percent to $5.26, and Flight Centre leaped 6.66 percent to $15.22. “Travel stocks picked up on the back of remarks from the Prime Minister, who is intending to end lockdowns based on vaccination rates, irrespective of active cases,” OMG chief executive Ivan Tchourilov said.
“If states follow through with the Prime Minister’s orders, interstate travel could resume before the end of the year, and with Pfizer receiving the OK in the US, investors are hoping to see international travel in the not-too-distant future as well.”
In the tech sector, buy-now-pay-later provider Afterpay gained 1.58 percent to $135.10 while smaller rival Zip advanced 2.52 percent to $7.32. Online retailer Kogan took a hammering, plummeting 15.77 percent to $11.06 after reporting a near 87 percent plunge in 2020-21 net profit.
“Despite a 50 percent increase in sales revenue for the year, they were unable to capitalize,” Mr. Tchourilov said. “Kogan, like many other e-commerce companies, has fallen victim to Covid-related inventory storage and logistics complications. “In the current climate, too much stock can quickly become expensive, and their second-half over-estimate in inventory levels was no exception.
“This, combined with Scotty’s hint at an earlier end to lockdowns, meaning consumers will be out of their houses and into brick-and-mortar stores, has investors bearish on the e-commerce specialist.”
The broader retail sector was weaker, with Coles shedding 3.08 percent to $18.26, rival Woolworths slipping 1.1 percent to $41.38, Bunnings owner Wesfarmers losing 1.58 percent to $64.65, Harvey Norman backtracking 2.25 percent to $5.66, and JB Hi-Fi retreating 1.54 percent to $47.35.
Domino’s Pizza gave up 2.5 percent to $143.23. Gloves and condoms maker Ansell sank 9.19 percent to $36.78 after its disappointing full-year results, despite its healthcare division growing almost 35 percent on strong demand due to the pandemic.
Citi said the company’s earnings before interest and tax of $US338m ($A467m) was 4 per cent below consensus, but revenue of $US2.027bn ($A2.8bn) was 1 per cent above consensus and benefited from exchange rates.
Bathroom products maker Reece posted a 25 percent rise in full-year net profit. Chief executive Peter Wilson said construction activity is at an all-time high had led to record results. In February, Reece reported that Texas was hit hard by winter storm Uri, causing burst pipes and other big plumbing problems.
Shares in the company gave up 2.88 percent to $25. Building products supplier Boral booked a full-year statutory net profit of $640m compared to a loss of $1.145bn in fiscal 2020. “Boral’s earnings for fiscal 2021 were in line with our expectations, although its revenue from continuing operations decreased 6 percent,” Moody’s Investors Service vice president Saranga Ranasinghe said.
“The drop was driven by lower product demand due to delays in major infrastructure projects and weak demand from multi-residential and non-residential construction. “Growth in detached housing and the alterations and additions segments partially offset the weakness from other segments.”
Boral shares backtracked 5.55 percent to $6.27. ANZ added 0.25 percent to $28.39, Commonwealth Bank gave up 0.26 percent to $99.91, National Australia Bank inched one cent higher to $27.40, and Westpac put on 0.5 percent to $25.91. The Aussie dollar fetched 72.35 US cents, 52.63 British pence, and 61.58 Euro cents in afternoon trade. Originally published as Australian sharemarket gains ground for the second day running, travel and resources the winners.