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Australian sharemarket breaks closing, intraday records as company reports impress investors amid more M&A

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The ASX goes from strength to strength, sending previous records tumbling as company earnings reports impress and takeover action rises. The Australian sharemarket hit another fresh record high on continued positive earnings reports and mergers and acquisitions action.

The benchmark S&P/ASX200 index finished 0.5 percent stronger at 7431.4, while the All Ordinaries Index rose 0.44 percent to 7704. OMG chief executive Ivan Tchourilov noted the S&P/ASX 200 also reached an all-time intraday high of 7447.9. It comes after fresh record closing highs on Thursday and Friday.

According to CommSec, the S&P/ASX 200 index has been gaining ground for 10 straight months, up 12.8 percent this calendar year and 1.6 percent in July. The mining sector was yet again a big contributor to the gains. “The common theme of the earnings reporting season so far has been strong performance in the materials sector,” Mr. Tchourilov said.

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“Oz Minerals, BlueScope, and BHP were among the big leaders today, with international demand for iron and steel outweighing a slowdown in domestic construction work due to Covid lockdowns.” OZ Minerals surged 6.53 percent to $23.48 after its June quarter report showed a rise in gold and copper production, while costs fell.

BlueScope leaped 6.4 percent to $24.43 after booking a record preliminary unaudited second half result, with earnings beating its guidance. BHP gained 2.79 percent to $53.36 while rival Rio Tinto appreciated 1.8 percent to $132.47. “The materials sector performance was eclipsed today, however, by monumental gains in aged care companies such as Japara Healthcare, Regis Healthcare, and Estia Healthcare,” Mr. Tchourilov said.

Japara rocketed 18.46 percent to $1.38 after backing an improved takeover offer of $1.40 cash per share by Calvary, also known as the Little Company of Mary Health Care. “This represents a significant premium on yesterday’s close at $1.165,” Mr. Tchourilov said.

“Shareholders of closely correlated peers Estia and Regis Healthcare have been direct beneficiaries of Calvary’s show of confidence in the aged care industry.” Estia advanced 8.64 percent to $2.39 while Regis soared 12.57 percent to $2.15.

Imugene, which is developing therapies that seek to activate the immune systems of cancer patients to treat and eradicate tumors, went into a trading halt pending an announcement about a capital raising. Takeover target Oil Search dipped 0.5 percent to $3.93 despite its second-quarter report showing it was on track to deliver full-year production and capex guidance.

The report made no mention of suitor Santos, which last week revealed its merger proposal had been spurned by the Oil Search board. RBC Capital Markets maintained its outperform rating for Oil Search, which oil and gas analyst Gordon Ramsay said had a standout long-term growth profile in the Australian energy sector, partly driven by its proposed Pikka oil development in Alaska.

Ord Minnett said the report showed a strong quarter with production, sales, and revenue above its expectations. Santos lifted 1.39 percent to $6.55. Furniture and homewares e-tailer Temple & Webster booked a record full-year result, with earnings before interest and tax up a whopping 141 percent.

This financial year is off to a strong start for the company, with revenue up almost 40 percent for the first 24 days of this month, and the retailer says its growth goes beyond the pandemic-sparked online shopping and home sprucing boom.

Temple & Webster shares rose as high as $13.33 in early trade before closing 7.4 percent higher at $12.47. Mining services company Aquarian made a stellar ASX debut, surging 20 percent to 24 cents after raising $8m in a significantly oversubscribed IPO.

Bank stocks contributed a big boost to the market, with ANZ putting on 0.87 percent to $27.91, Commonwealth Bank gaining 1.58 percent to $100.71, National Australia Bank edging 0.15 percent higher to $25.98, and Westpac improving 0.69 percent to $24.79.

The travel sector was in the green despite NSW recording its biggest spike in new locally acquired Covid-19 cases since the Delta outbreak began last month – 172, plus two more deaths – but Victoria announced the lifting of its fifth lockdown.

Flight Centre added 0.76 percent to $14.52, Qantas rose 1.96 percent to $4.69, and Webjet firmed 0.83 percent to $4.88. Mr. Tchourilov said A2 Milk Company was among this week’s biggest losers, spilling 30 cents to $6 on Tuesday without any release of information to the market.

“Maybe there’s no point crying over it, but it’s worth noting that several recent divestments from substantial holders and the prospect of an extended lockdown have dampened its recent gains,” he said. The Aussie dollar was buying 73.66 US cents, 53.3 British pence, and 62.45 Euro cents in afternoon trade.

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