Australian sharemarket starts November in the green, with travel stocks rising but Westpac tanking
News of a Singapore travel bubble helped stocks such as Qantas, but Westpac tanked after its full-year results failed to impress.
The Australian sharemarket marched higher on the first trading day of the month, with travel stocks boosted by news of a Singapore travel bubble, but top-four bank Westpac was a major drag after its full-year results failed to impress.
The benchmark S&P/ASX200 index closed 0.64 per cent stronger at 7370.8, while the All Ordinaries Index gained 0.7 per cent to 7692.2.
The recovery after Friday’s sell-off, which was the worst day in four weeks, followed a positive lead from Wall Street.
“If past performance is anything to go by, we’d be seeing bull sentiment build up into the new year – and yes, past performance is not indicative of future results, but who wants to hear that?” OMG chief executive Ivan Tchourilov said.
“Whether the excellent start (to November) continues will depend on what comes out of the RBA board meeting tomorrow morning.
“Key financial institutions are betting on the RBA rolling back its yield curve control policy (buying specific bonds to force the yield into target range) and expecting rate hikes to be brought forward from the 2024 date provided previously.”
CommSec analyst Steven Daghlian said the bond market had been moving quite aggressively in recent sessions.
“In fact on Friday, the 10-year bond yield rose above 2 per cent for the first time since the pandemic started … this is important because it’s seen as a bit of a benchmark for interest rates on loans across the economy, both for home and also business loans,” he said.
“The market has been recently very much focused on higher inflation, which has been on the way up around the world. It’s been the case in Australia … with both business and also consumer inflation rebounding more than was anticipated by many economists.”
Any comments by the RBA on updated forecasts and policy on Tuesday would be in laser-focus, he noted.
Westpac reported a 138 per cent surge in statutory net profit to $5.458bn, but its shares slumped 7.36 per cent to $23.78.
“An announced $3.5bn share buyback plan wasn’t enough to combat the sell-off,” Mr Tchourilov said.
“Westpac more than doubled cash earnings for the year to September, which unfortunately fell short of guidance.
“Expenses surged and their net interest margin was shaved down during the second half of the financial year, meaning income for the period was way below expectations.
“The buyback comes as a partial sweetener that will consolidate positions for those still holding the shares.”
ANZ inched one cent higher to $28.15, Commonwealth Bank rose 1.54 per cent to $106.29 and National Australia Bank backtracked 0.9 per cent to $28.45.
Travel stocks gained ground after it was announced at the G20 summit on Sunday that fully vaccinated travellers from Singapore would be allowed to visit parts of Australia from November 21.
Qantas lifted 2.99 per cent to $5.51, Flight Centre appreciated 2.1 per cent to $20.41, Webjet added 1.74 per cent to $6.43 and Corporate Travel Management firmed 1.14 per cent to $24.77.
Rio Tinto improved 0.75 per cent to $90.97, BHP slipped 0.47 per cent to $36.41 and Fortescue lifted 2.87 per cent to $14.33.
Mr Tchourilov said his company’s traders bought on the dip with Fortescue, BHP and Rio Tinto last month, which each respectively lost 5.8 per cent, 1.5 per cent and 7.7 per cent.
“Demand for iron ore has dropped significantly since the highs of earlier in the year,” he said.
“However, the mineral will be a mainstay in the medium, as seen by the sustained pricing above $US100 per tonne, making the lower valuations an enticing enough entry point.”
Gold miner Ramelius lobbed an improved cash and scrip takeover offer for Apollo Consolidated that was backed by the target, trumping a rival bid by Gold Road Resources.
RBC Capital Markets mining analyst Kaan Peker noted Apollo’s appeal to Ramelius was its wholly owned Lake Rebecca project in Western Australia and said the consideration on offer appeared to be fair value.
Ramelius cast doubt on Apollo’s capacity to develop the project into a mine, saying it was in a stronger position.
Ramelius shares eased 0.3 per cent to $1.58, Apollo jumped 6.67 per cent to 64 cents and Gold Road was steady at $1.38.
Seven West Media leapt 14.29 per cent to 52 cents after announcing it had inked a conditional deal to buy regional broadcaster Prime Media Group, saying the acquisition would create a combined news network “reaching more than 90 per cent of the Australian population every month”.
The takeover price of $121m was a 57 per cent premium to Prime’s closing share price on Friday and sent its shares rocketing 73.9 per cent to 40 cents – a more than four-year high.
Men’s underwear e-tailer Step One Clothing made a stellar ASX debut, rallying 79.74 per cent to $2.75.
The Aussie dollar was fetching 75.07 US cents, 54.85 British pence and 64.93 Euro cents in afternoon trade.
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