ASX Close: Diggers Steer Market to Fourth Straight Win

The major miners dug the share market out of a hole after soaring commodity prices helped drive Wall Street sharply lower overnight.

The S&P/ASX 200 fell 55 points in early action before a commodities-led rebound. The Australian benchmark reversed to a gain of 20 points or 0.28 per cent. Today’s advance was the local market’s fourth in a row.

Woodside Petroleum, Fortescue Metals and Rio Tinto all gained at least 4.6 per cent as investors looked for winners from the Russia-Ukraine crisis. Commodities from crude to iron ore, wheat and aluminium surged overnight on supply worries.

Bank and consumer stocks kept gains in check amid fears about the inflationary impact of soaring prices.

What moved the market

Australia’s status as a major commodities producer helped shield it from pressure on financial markets. The ASX was a regional outlier following sharp falls on Wall Street and amid selling in Asia.

The Dow slumped 598 points or 1.76 per cent overnight to its second-worst loss of 2022. The S&P 500 shed 1.55 per cent and the Nasdaq Composite 1.59 per cent.

In Asia today, the Asia Dow lost 1.03 per cent, China’s Shanghai Composite 0.41 per cent, Hong Kong’s Hang Seng 1.07 per cent and Japan’s Nikkei 1.8 per cent.

The ASX was rescued by its heavily-weighted mining and energy sectors and its position as an indirect beneficiary of sanctions against Russia. Iron ore, crude oil, aluminium, nickel and wheat surged overnight. The Bloomberg Commodity Spot Index jumped 4.1 per cent, its biggest increase since 2009.

Bent crude cruised above US$110 a barrel this afternoon, surpassing its overnight seven-year high. The international benchmark was last up US$5.13 or 4.9 per cent at US$110.12. Wheat jumped 8 per cent in Chicago.

The rallies came as western nations continued to tighten sanctions on Russia. In today’s State of the Union address, US President Joe Biden said his government would go after Russian President Vladimir Putin’s inner circle.

“The U.S. Department of Justice is assembling a dedicated task force to go after the crimes of Russian oligarchs. We are joining with our European allies to find and seize their yachts, their luxury apartments, their private jets. We are coming for their ill-begotten gains,” he said.

Helping the market mood today was news the economy rebounded last quarter. Gross domestic product increased 3.4 per cent, broadly in line with expectations. Household spending rose 6.3 per cent.

“After experiencing a fall of 1.9 per cent in the September quarter due to a number of state lockdowns, the Australian economy recovered in the December quarter, growing 3.4 per cent and surpassing the pre-Delta June quarter 2021 level,” ABS head of national accounts Sean Crick said.

The ASX has outperformed the US during the Ukraine sell-off, but investors should remain defensive in their allocations, according to Kalkine Group CEO Kunal Sawhney.

“Russia’s invasion of Ukraine has triggered massive stock market volatility across the globe, with some investors resorting to panic selling amidst sharp market swings,” Sawhney said.

“But is it the right time for such investors to re-enter the market? Although the ongoing market turmoil seems to be a good opportunity for investors to embrace fundamentally sound stocks, investors who are more prone to impulsive sell-offs usually do not re-enter the market during high volatility.

“Experts suggest that such investors generally reconsider their asset allocation, shifting to safe-haven assets while taking less stock exposure. However, investors who panic sell at the wrong time or during a healthy correction may miss out on future gains associated with the stock market recovery.”

Winners’ circle

Woodside Petroleum climbed 6.14 per cent to a two-year high as international oil benchmarks hit multi-year peaks. Santos gained 6.2 per cent and Beach Energy 4.22 per cent.

A 3.8 per cent lift in iron ore back towards last month’s high boosted Rio Tinto 4.62 per cent, Fortescue Metals 4.67 per cent and BHP 3.8 per cent.

A strong night on the London Metal Exchange helped raise South32 5.89 per cent. OZ Minerals firmed 3.87 per cent.

Whitehaven Coal gained 5.92 per cent. Mineral Resources put on 1.28 per cent despite news Peter Wade will retire as Chair and as a director.

A 13-month high in gold lifted precious metals miners. Sandfire Resources bounced 5.07 per cent, Ramelius Resources 4.86 per cent and Silver Lake Resources 4.47 per cent. Newcrest edged up 1.07 per cent to a near four-month high.

Pain relief manufacturer Medical Developments (MVP) surged 31.67 per cent after a key product moved closer to US regulatory approval. The US Food and Drug Administration lifted a “clinical hold” on MVP’s Penthrox analgesic, clearing the way for a Phase III US clinical trial. The product is widely used in other countries, including Australia.

A supply deal with Tesla lifted Core Lithium shares 15.15 per cent. The companies entered a binding term sheet for Core Lithium to supply up to 110 thousands of tonnes of spodumene concentrate to Tesla over four years.

Metals Australia jumped 66.04 per cent on positive rockchip results from its Manindi lithium project in WA.

Cobalt Blue put on 20.65 per cent after the federal government granted its Broken Hill cobalt project Major Project Status. The miner said the governmental stamp of approval will make it easier to raise development capital.

Doghouse

Shareholders in growth stocks suffered whiplash as some of yesterday’s best performers staged abrupt U-turns. PointsBet plunged 11.75 per cent, reversing much of yesterday’s 17.46 per cent gain. Zip Co slid 5.8 per cent, Imugene 5.66 per cent and Mesoblast 4.35 per cent.

The big four high-street banks retreated as declines in long-term interest rates threatened profit margins. ANZ lost 2.18 per cent, NAB 1.26 per cent, Westpac 1.66 per cent and CBA 0.13 per cent,

Other heavyweight drags included Telstra -0.51 per cent, Aristocrat Leisure -3.01 per cent and Block -0.74 per cent.

Insurers added to losses over the last week as torrential rains moved south to Sydney. IAG dropped 4.35 per cent, QBE 4.1 per cent and Suncorp 1.56 per cent.

A profit upgrade on strong demand for Rapid Antigen Test (RATs) did not save Sigma Healthcare from a fall of 2 per cent. The pharmacy chain raised its full-year underlying earnings guidance to growth of 10-15 per cent from previous guidance of a decline of around 10 per cent.

Telix Pharmaceuticals ended flat after deteriorating market conditions forced the biotech to scrap plans to raise money from retail shareholders. The share purchase plan became unviable after the share price fell far below the $7.70 placement price at which the firm raised $175 million from institutional investors in January.

Other markets

A rebound in US futures raised hopes for tonight. S&P 500 futures firmed 14 points or 0.33 per cent.

Gold trimmed strong overnight gains. The yellow metal eased US$3.70 or 0.2 per cent to US$1,940.10 an ounce.

The dollar climbed 0.1 per cent to 72.68 US cents.