‘Resilient’ Australian sharemarket stays in the green despite lower oil price hitting energy stocks

The ‘resilient’ ASX bounced higher after Wall Street hit fresh record highs, providing a positive lead, but energy stocks got whacked.

The Australian sharemarket edged higher in a volatile trading session despite the impact of lower oil prices on energy stocks.

The benchmark S&P/ASX200 index lifted 0.48 per cent to 7428, while the All Ordinaries Index gained 0.43 per cent to 7746.3.

CommSec analyst Tom Piotrowski said the US Federal Reserve’s decision to outline the tapering of its bond-buying program in the near-term had been widely expected and Wall Street surged to record highs overnight.

The local market got more clarity on Tuesday in relation to our own central bank’s position on interest rates and consolidated, proving resilient, Mr Piotrowski said.

“To be actually holding up as well as it has over the last couple of days is quite a show of resilience,” he said.

OMG chief executive Ivan Tchourilov said commodity prices continued to bounce around on various global headwinds, with energy stocks getting whacked after crude oil prices fell.

The Australian sharemarket has extended yesterday’s rally, with the #ASX200 closing up 35 points or 0.5% to 7,428. Most sectors climbed higher with the exception of the Utilities (-0.4%), Consumer Discretionary (-0.5%) and Energy (-2%) sectors

— CommSec (@CommSec) November 4, 2021

“US oil inventories are stocked up after the October supply squeeze, and protests are getting louder over OPEC gradual supply increases, which are too slow for some of the larger consumers’ liking,” Mr Tchourilov said.

Beach Energy slumped 5.15 per cent to $1.29, Santos dropped 3.12 per cent to $6.84, Oil Search slid 2.77 per cent to $4.21, Woodside lost 2.67 per cent to $22.99 and Origin declined 1.19 per cent to $4.97.

Rio Tinto weakened 1.54 per cent to $88.32, the more diversified BHP improved 0.25 per cent to $36.03, Mineral Resources gave up 2.35 per cent to $38.16 and Fortescue retreated 1.39 per cent to $14.18.

“Iron ore prices took a fairly decent knock in the past day, down by around 3 per cent,” Mr Piotrowski said, noting BHP had bucked the downward trend.

A strong performer was AVZ Minerals, which rocketed 13.42 per cent to 46.5 cents.

CSR rose 4.67 per cent to $6.28 after reporting a 30 per cent surge in half-year net profit, saying its building products division had benefited from positive conditions in the detached housing market and declaring an interim dividend at the top end of its policy for shareholder payouts.

Myer eased 0.9 per cent to 55 cents after copping a bruising “second strike” against its remuneration report at the department store chain’s annual general meeting, which prompted a board spill motion, but less than 38 per cent of proxy votes were in favour – below the required 50 per cent threshold.

It was a dramatic AGM for Myer, which also copped a substantial amount of proxy votes against the re-election of directors and the grant of performance rights to the CEO. Picture: Dan Peled / NCA NewsWire

A big chunk of the dissent came from Myer’s biggest shareholder, Solomon Lew’s Premier Investments, which has long been agitating against the board, unhappy with its performance and calling for a clean sweep, but did not offer any nominees in time for the meeting.

ABS September quarter retail sales results were released, showing a 4.4 per cent drop, which Mr Tchourilov described as significant but smaller than most estimates, “making the effect on the market null”.

“Next quarter’s results will have a much bigger impact, where market expectations of a rapid recovery will be tested,” he said.

Domino’s Pizza copped a beating after investors digested a trading update showing weak performance levels in Japan and slow growth in the domestic market as the AGM was held after the ASX closed on Wednesday.

“With major parts of the population no longer confined to indoors, Domino’s product offering has lost a bit of steam,” Mr Tchourilov said.

“This issue stands for both the Australian market and Japan, whose national State of Emergency finished at the end of September.

Domino’s committing to net zero grabbed initial headlines, but investors digested the details of the trading update overnight and were not impressed. Picture: Brenton Edwards / NCA NewsWire

“The market expectation of an interest rate hike is also hurting Domino’s bottom line. Higher rates will make the Australian dollar stronger – less bang for your buck on international sales.”

Shares in Domino’s plunged 18.4 per cent to $116.12.

Nufarm jumped 5.78 per cent to $4.94.

“The share price has been choppy since reporting season in August and investors now appear to be bullish on the Nufarm AGM in two weeks,” Mr Tchourilov said.

“Without getting into the boring specifics, it takes a large amount of gas to make fertiliser.

“Over the past couple of months, natural gas shortages in the northern hemisphere led to a spike in fertiliser prices, which have investors betting on some good results for the seeds and crop protection specialists.

“It’s definitely one to keep an eye on.”

ANZ added 0.88 per cent to $28.72, Commonwealth Bank found 1.4 per cent to $108.50, National Australia Bank firmed 0.42 per cent to $28.70 and Westpac appreciated 0.22 per cent to $23.20.

The Aussie dollar was fetching 74.34 US cents, 54.43 British pence and 64.14 Euro cents in afternoon trade.

Originally published as ‘Resilient’ Australian sharemarket stays in the green despite lower oil price hitting energy stocks