The ASX closed at a new nine-week high on Wednesday as banks and tech names like Afterpay owner Block Inc made strong gains,despite sudden moves in government bond markets.
The benchmark S&P/ASX 200 closed 0.5 per cent higher,up 36.8 points to 7377.9. The index is down less than one per cent so far this year,compared to a 5.9 per cent fall in the MSCI World Index. Futures were weak for Wall Street’s Wednesday session.
Brent crude prices increased 1.3 per cent to $US117.01 per barrel,but US crude eased back 1.3 per cent to $US110.58 per barrel.
Sudden moves in bond yields cemented expectations of future interest rate rises,and also prompted fund managers to sell down technology stocks.
“The yield on the 10-year Australian government bond has hit 2.8 per cent today,the highest level since October 2018,and up 20 basis points in just one day”′ VanEck’s head of investments and capital markets,Russel Chesler said.
“The momentum at the moment is strong,and we anticipate the 10-year bond yield will climb over 3 per cent in the short term.”
His equal weight fund has sold out of five stocks including Zip and Magellan in recent weeks due to share price declines.
“Speculative technology companies which investors have favoured in the last few years have fallen significantly and will remain under pressure as yields rise. With persistent inflation,we favour those companies with strong fundamentals.“
Banking sector gains saw Macquarie Group return to $200 and Commonwealth Bank close at fresh five months highs of $107.45. NAB closed at a new four-year high of $31.72 while Westpac and ANZ also improved.
Materials dragged with BHP down 0.8 per cent and gold miners lower,but lithium and nickel players improved. Boral gained 2.1 per cent to $3.40 after falling sharply on Tuesday.
The energy sector was flat. Santos fell 0.3 per cent despite announcing a “significant oil discovery” off Western Australia’s shore. The smaller owner of a nearby field,Carnarvon Energy,jumped 14.1 per cent to 36.5 cents.
Kathmandu gained 3.7 per cent to a four-week high of $1.27 after warning of a $5 million first half loss due to COVID lockdowns and disruptions.
Uniti soared before going into a trading halt amid speculation it has a rival suitor.
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