As it happened: ASX extends post-pandemic high with 1% gain

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As it happened: ASX extends post-pandemic high with 1% gain

Summary

  • The miners and banks were strong as the ASX 200 added 1% to close at 6998.8 on Thursday, its highest finish in 13 months
  • The market moved within 3% of its all-time high set on February 20 last year when it nudged an intraday peak of 7012.4 
  • US Futures were pushing higher in afternoon trade AEST. The S&P500 E-mini was up 0.5%, while the Nasdaq rose 0.9% and the Dow was 0.3% higher
  • Iron ore gained another 1.6% to hit $US173.63 a tonne, helping Fortescue Metals, BHP, and Rio Tinto bank solid gains

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Good night all

That’s it from us today at Markets Live. Thanks for tuning in!

Alex Druce will be back in the morning to tie up what has been a pretty extraordinary week.

See you then.

Get our wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for The Sydney Morning Herald’s here and The Age’s here.

Markets wrap: Blue-chips bounce as ASX extends 13-month high

By Alex Druce

Australia’s blue-chip companies did the heavy lifting on Thursday as the S&P/ASX 200 extended its post-pandemic high with the best session in five weeks and briefly reached 7000 points.

Gains for miners BHP and Rio Tinto, the Big Four banks, biotech CSL, Fortescue Metals and Telstra helped the benchmark index add another 1 per cent to close at a new 13-month high of 6998.8.

It was the market’s fifth rise on the trot, and still the longest winning run since early December.

The ASX 200 hit a new post-pandemic peak on Thursday.

The ASX 200 hit a new post-pandemic peak on Thursday. Credit:Louie Douvis

Thursday’s barnstorming session also saw the local benchmark nudged an intraday peak of 7012.4 and move within 3 per cent of the all-time high set on February 20 last year.

It was the first time the market had risen above 7000 since the early stages of the coronavirus-driven market plunge.

The ASX again shrugged off an indifferent Wall Street performance to start higher.

OANDA’s Asia Pacific analyst Jeffrey Halley said the lack of any hawkish surprises in the US Fed’s latest minutes had helped sentiment, though investors were sure to be closely watching Jerome Powell’s speech overnight for signs of a change in Fed guidance.

“With the US economic risks weighted to the upside as their recovery gathers momentum, a slip of the tongue, deliberate or not, will likely see bonds and equities punished and the US Dollar rally,” Mr Halley said.

GSFM investment consultant Stephen Miller said central banks the world over had their “pedal to the metal” and made it clear they would not be shifting their extraordinarily accommodative policy settings until inflation targets were met.

“Central banks are banging the drum, they are saying to markets with a loudhailer ‘we are not for turning’,” he said.

“Sometimes markets get a bit jittery when there is a bit of inflation and there are fears they will have to taper earlier.

“But every time a central banker opens their mouth - be it Philip Lowe or Jerome Powell - they are saying they are not going to withdraw any bit of these historically accommodating levels of stimulus, and they’re not doing it soon.”

Rising iron ore prices continued to power Australia’s mining triumvirate of BHP, Rio Tinto Fortescue Metals, with each firm gaining strongly on Thursday.

The mining team at RBC Capital Markets said climbing steel prices and strong Chinese demand had translated into strong margins, increasing the ability to pay higher prices for iron ore.

The bulk metal climbed 1.6 per cent to hit $US173.63 a tonne, with BHP adding 2.6 per cent to close at $47.06, Rio rising 2.2 per cent to $115.88, and Fortescue Metals up by 2.5 per cent to finish at $21.

Westpac was the best of the Big Four banks, up 1.3 per cent to $25.16, followed by NAB and ANZ, which each added 1.1 per cent, and Commonwealth Bank, which lagged the wider ASX 200 with a 0.7 per cent rise.

Macquarie Group climbed by 1,3 per cent to $153.61 and CSL finished 1.1 per cent higher at $265.94.

Telstra rose by 1.2 per cent to $3.43 and Woolworths added 1 per cent to close at $41.76.

ASX extends 13-month high as blue-chips surge

By Alex Druce

The miners and banks were strong as the ASX 200 added 1 per cent to close at 6998.8 on Thursday, its highest finish in 13 months.

It was the market’s best session in five weeks and a fifth straight rise - continuing its longest winning run since early December.

The local benchmark moved within 3 per cent of its all-time high set on February 20 last year when it nudged an intraday peak of 7012.4.

The iron ore giants, Big Four banks, biotech CSL, Wesfarmers, Macquarie Group, Woolworths and. Telstra all finished higher.

US futures continued to climb throughout the afternoon and were pointing to gains on Wall Street tonight.

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Rio braces for the shareholder mob armed with their voting pitchforks

By Elizabeth Knight

Opinion

On the eve of one of the most highly anticipated annual meetings of the season, it’s virtually inevitable that Rio Tinto will suffer an embarrassing large vote against its remuneration report.

This will be a protest from major shareholders around the world who were livid over the generous parting gift, valued at $48 million, the Rio board awarded to the former chief executive Jean-Sebastian Jacques.

His resignation was forced by a large angry mob of shareholders who held him largely accountable for the cultural carnage resulting from blowing up indigenous sacred sites in West Australia’s Juukan Gorge.

Juukan Gorge contained prized cultural heritage.

Juukan Gorge contained prized cultural heritage.Credit:PKKP Aboriginal Corporation

However, the Rio board saw fit to characterise Jacques and the two other senior executives shown the door following the crisis, Chris Salisbury and Simone Niven, as “good leavers”. This protected a large portion of the trio’s entitlements.

So it’s unsurprising that the mob is still carrying the voting pitchforks.

Already the large proxy advisory firms ISS Governance, Glass Lewis and the UK-based PIRC have recommended against the remuneration report as has the Australian Council of Superannuation Investors.

For the Rio board, it will be the first of two annual meetings it will have to endure over the next four weeks. Given it is the first time the board has faced the mass of angry small shareholders, both are set to be fiery affairs.

Read Elizabeth Knight’s full column here 

‘Before end of this year’: Novavax COVID vaccine could be months away

By Emma Koehn

Regulatory approvals for the third pillar of Australia’s vaccine strategy may not be obtained until the end of the year, keeping the country largely reliant on the AstraZeneca jab for the time being.

Australia has more than 50 million doses of Novavax’s COVID vaccine on order, and while the US pharma giant is confident it can deliver, there is no set timeline in its contract. The local rollout could be months away, with the company prioritising approvals from regulators in the US and the UK first.

Concerns about the nation’s access to more vaccine options came into focus over the past week, with the government’s reliance on the AstraZeneca product increasingly questioned amid conflicts over the release of doses from Europe and a review of possible links between the AstraZeneca vaccine and rare blood clots.

Trials of the Novavax vaccine have found it is 89 per cent effective in reducing COVID-19 but less effective against the new, more contagious strains.

Trials of the Novavax vaccine have found it is 89 per cent effective in reducing COVID-19 but less effective against the new, more contagious strains. Credit:Getty

The country has also purchased 20 million doses of the Pfizer/BioNTech vaccine. But this must be imported too, with only 870,000 doses received so far, according to a federal government spokeswoman.

Novavax does not have a commercial presence in Australia, but the $17 billion US company has been laying the groundwork to import doses of its product once it gets approved.

It has started the approvals process with the Therapeutic Goods Administration and formed a partnership with a local sponsor, Sydney-based pharmaceuticals company Biocelect, to help bring the product to Australia.

“It is anticipated [the vaccine], NVX-CoV2373, will be ready for the Australian market and distribution before the end of this year,” a Novavax spokesman said.

Read the full story here

‘Last kick of the can’: Property market reckoning coming

By Shane Wright

The Reserve Bank’s charter requires it to work towards the economic prosperity and welfare of all Australians, but for most people that can be narrowed down to one issue – house prices.

Since the advent of non-bank lenders in the mortgage market in the 1990s, property prices have grown faster than wages and inflation, generating an ongoing debate about who is to blame for a situation that leaves one of the world’s most sparsely populated nations with some of the globe’s most expensive housing.

It’s an issue of which the RBA is acutely aware. And the sharp lift in house prices through the past 12 months, as interest rates have fallen to their lowest levels in history while governments have thrown billions of dollars at housing stimulus packages, has amplified the focus on the RBA and its role.

Current and former RBA governors Philip Lowe and Glenn Stevens have both said good infrastructure is needed to help take the heat out of property prices.

Current and former RBA governors Philip Lowe and Glenn Stevens have both said good infrastructure is needed to help take the heat out of property prices.Credit:Louie Douvis

Commonwealth Bank’s head of Australian economics, Gareth Aird, says falling interest rates have been a major economic tailwind for the past 30 years.

But with rates at zero, and households carrying record levels of debt, a reckoning is coming that would be felt across the economy and especially in the property market.

“Every time the central bank cuts interest rates, a person walks into a bank and asks for a bigger loan to pay for a house. It happens again and again,” he says. “You get to that point where you can’t keep doing that when you have interest rates at zero. We’ve now had the last of the kicks of the can down the road.”

Read the full story here

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Roc retakes upper hand in Vitalharvest arm wrestle

By Alex Druce

Roc Partners has reclaimed the upper hand in the arm wrestle for $220 million orchard landlord Vitalharvest, trumping Macquarie’s latest bid by 4 cents per share.

ASX-listed Vitalharvest on Thursday said Roc had increased its takeover proposal to $1.16 per unit, just a day after Macquarie Infrastructure and Real Assets had lifted its own bid to $1.12 to match an offer by the Sydney-based fund manager.

Sydney-based fundie Roc Partners has increased its bid for ASX-listed Vitalharvest.

Sydney-based fundie Roc Partners has increased its bid for ASX-listed Vitalharvest. Credit:Cathleen Abers-Kimball

Roc may now also purchase the assets of the Vitalharvest Freehold Trust for $329.6 million, up from $322.2 million.

Vitalharvest manages the land on which Costa Group farms berry and citrus fruits in seven locations across NSW, South Australia, and Tasmania.

The firm said Roc’s latest offer was the superior proposal, and gave Macquarie five business days to match it.

Failing that, it will enter into an agreement with Roc.

The bidding war sent shares in Vitalharvest 4.8 per cent higher on Thursday to a record $1.195, above the latest buyout offer price.

Gallin hits back over “opportunitic” McPherson’s takeover claims

By Dominic Powell

Raphael Geminder’s investment vehicle Gallin has hit back at listed health and beauty company McPherson’s, which earlier today issued a Target’s Statement rubbishing Gallin’s $1.34 per share takeover offer as “utterly opportunistic”.

Nick Perkins, Gallin’s managing director, said McPherson’s had failed to address shareholder uncertainty over the business’ performance and accused the business of “losing its way”.

“Gallin remains highly concerned with the profound lack of transparency and failure by McPherson’s to provide clarity on current financial performance,” he said.

Pact Group chairman Raphael Geminder.

Pact Group chairman Raphael Geminder.Credit:Pat Scala

“The Target Statement is utterly underwhelming and uninformative – it contains no new information or tangible plans and reinforces that this is a company that has lost its way.”

“The long-standing chairman, and the recent internal appointment of the CEO, is likely to entrench the company’s substandard performance. The Target’s Statement provides no hope to shareholders of a credible path forward.”

Mr Miller said the business had not provided a recent trading update and was relying on an operational update in May, which he said was “extraordinary” in the context of the takeover offer.

McPherson’s shares have gained slightly today, up 1 per cent at $1.43.

Left wing party wins Greenland election after opposing Australian company’s mine

By Jari Tanner

Helsinki: Greenland’s main opposition party, which campaigned heavily against an Australian company’s mining project involving uranium and other metals on the Arctic island, has emerged as the biggest party after winning more than a third of votes in an early parliamentary election.

The result of casts doubt on the mining complex at Kvanefjeld in the south of the Arctic island and sends a strong signal to international mining companies wanting to exploit Greenland’s vast untapped mineral resources.

The island of 56,000 people, which former US President Donald Trump offered to buy in 2019, is part of the Kingdom of Denmark but has broad autonomy.

Much of Greenland’s election focused on whether the semi-autonomous Danish territory should allow international companies to mine the sparsely populated Arctic island’s substantial deposits of rare-earth metals.

Much of Greenland’s election focused on whether the semi-autonomous Danish territory should allow international companies to mine the sparsely populated Arctic island’s substantial deposits of rare-earth metals.Credit:AP

With all votes counted on Wednesday (Greenland time), the left-leaning Community of the People party (Inuit Ataqatigiit) had secured 37 per cent of the votes, entitling it to 12 seats in the Greenlandic national assembly, the 31-seat Inatsisartut.

Its biggest rival, the ruling centre-left Forward (Siumut) party took the second spot with 29 per cent of the votes, giving it 10 seats in the legislature.

In a victory speech, Community of the People chairman Mute Egede pointed to themes which made his party, running on a strong environmental agenda, to stand out among voters.

At the heart of the election was a proposed international mining project by Greenland Minerals, an Australia-based company with Chinese ownership, which is seeking a licence to operate the Kvanefjeld mine in southern Greenland.

Apart from uranium, estimates show the Kvanefjeld mine could hold the largest deposit of rare-earth metals outside China, which currently accounts for more than 90 per cent of global production, and that has led to international interest in Greenland’s natural resources.

While the Forward party has taken a cautiously positive stance on the mining project, Community of the People’s Egede reiterated on Wednesday his party’s opposition to the project and urged it to be stopped for environmental reasons.

Read the full story here

AP, Reuters

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The cash conundrum: There’s more money around, but it changes hands less often

By Stephen Bartholomeusz

Opinion

There is a divergence between the inflation expectations in financial markets and those of central bankers. Which side is right might depend on whether there is a break from a perplexing long-term trend.

For the moment, central bankers are sanguine about the outlook for inflation despite the enormous monetary and fiscal policy responses to the pandemic that are seeing many trillions of dollars of relief and stimulus spending and liquidity being pumped into the global financial system.

The minutes of the March meeting of the US Federal Reserve’s Open Market Committee meeting released overnight confirmed that the Fed expects to keep its benchmark lending rate at or near zero until 2024.

The supply of money in the global economy has increased dramatically, but it’s used less to fund productive activity.

The supply of money in the global economy has increased dramatically, but it’s used less to fund productive activity.

Futures markets, however, are pricing in at least one rate rise next year and another three by early 2024. The yield on US 10-year government bonds has risen 85 per cent since the start of this year to just under 1.7 per cent.

Conventionally, the massive increase in government spending and central bank liquidity ought to result in inflation – there is a lot more money chasing a relatively stable volume of goods and services -- and a subsequent response from central banks as they try to control it with higher interest rates and reduced liquidity.

From the early 1980s, however, as central banks increasingly switched their focus from the volume of money flowing through their economies to its price, using interest rates to target inflation levels, inflation has been subdued to the point that in the post-2008 financial crisis period they have been bemoaning the absence of inflation and expressing concerns about “secular stagnation”.

Read Bartho’s full column here 

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