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ASX defies ‘bloodbath’ expectations, bargain hunters buy up resources stocks

The ASX shrugged off Wall Street, and commodity prices fell as bargain hunters pounced on cheaper mining and energy stocks. Despite Wall Street, the Australian share market climbed, and commodity prices fell as bargain hunters bought up resource stocks. After tumbling 2.1 percent on Monday – the worst fall in seven months – the S&P/ASX200 index firmed 0.35 percent to 7273.8. The All Ordinaries Index lifted 0.33 percent to 7563.1. CommSec analyst Steven Daghlian said the local bourse performed “nowhere near” what futures were suggesting, despite concerns Chinese property giant Evergrande could collapse.

“We had completely shaken off the declines from the US market last night – it was the worst day in four months, down by about 1.7 percent,” Mr. Daghlian said. Chief executive Ivan Tchourilov said another “bloodbath” had been expected on the local market. Resources stocks were seemingly unaffected by a massive fall in commodity prices overnight. Mr. Daghlian said it appeared puzzling and counterintuitive that iron ore miners stood out. “The iron ore price … fell by 6.7 percent in the past day and has fallen to a 16-month low,” he said.


“It’s down 60 percent from the highs hit back in the middle of May. But remember yesterday, we had significant declines for most of the iron ore players, and they’ve also been the hardest hit since the start of this month. “Some bargain hunters perhaps jumping in and taking advantage of the recent sell-off.” Rio Tinto improved 0.49 percent to $95.71, BHP added 0.59 percent to $37.75, Fortescue lifted 0.34 percent to $14.75, Mount Gibson Iron rallied 6.17 percent to 43 cents, and Champion Iron gained 4.24 percent to $4.67.

“Remember Champion Iron is still trading 26 percent down from the end of August, with investors looking towards iron ore futures for guidance,” Mr. Tchourilov said. The energy sector strengthened after falling about 3 percent on Monday, with Woodside rising 1.65 percent to $20.92, Oil Search putting on 1.08 percent to $3.76, and its takeover suitor Santos appreciating 1.14 percent to $6.19. “Oil supply woes have been extended in the US. However, concern over the Chinese property sector is putting a cap on the recent price spike,” Mr. Tchourilov said.

ANZ inched one cent higher to $27.15, Commonwealth Bank declined 0.47 percent to $100.34, National Australia Bank backtracked 0.88 percent to $27.10, and Westpac shed 0.44 percent to $25.19 while Macquarie Group retreated 1 percent to $171.93. AusNet went into a trading halt at $2.36 after receiving improved indicative cash and scrip takeover offer from gas pipeline business APA Group. The power lines operator engaged with the company once its exclusivity period with a rival suitor and Canadian asset management giant Brookfield concluded.

Brookfield lobbed a sweetened indicative bid of $2.50 per share on Monday and is conducting due diligence on AusNet, which says there is no certainty it will lead to a binding offer. Retailer Kathmandu released its preliminary full-year report, flagging a massive profit surge and reporting solid sales performance by Rip Curl and Oboz, driven by more people surfing and hiking. Boss Michael Daly said Rip Curl’s wholesale order books were now significantly above pre-Covid levels, while the forward order book for Oboz was at its highest level ever. But Kathmandu stores continued to be hit by ongoing lockdowns and travel restrictions, including during the critical winter trading period.

Covid restrictions have also driven up freight costs and caused delivery delays. Shares in the group dropped 1.4 percent to $1.41. Coal miner, New Hope advanced 4.37 percent to $2.15 after reporting a return to full-year profitability. Crop protection specialist Nufarm continued to trade strongly, rising 4.23 percent to $4.68. “Nufarm has found its footing after a death cross in early August, and a breakout above the 200 day moving average here could indicate an uptrend for technical traders,” Mr. Tchourilov said. In economic news, the Reserve Bank of Australia board released the minutes of its latest meeting, saying economic recovery from the highly infectious Delta variant could be slower than the rebound earlier in the pandemic, given restrictions would likely be lifted gradually.

“The RBA’s updated assessment is now more in-line with the view of Commonwealth Bank group economists, who do not expect a return to the robust pre‑Delta economic growth path until the second half of 2022,” CommSec senior economist Ryan Felsman said. The weekly ANZ-Roy Morgan consumer confidence rating rose by 0.2 percent to a nine-week high of 103.3, compared to a long-run average since 1990 of 112.5. The CBA Household Spending Intentions Series revealed retail spending plans were soft in August but showed some stabilization from recent declines. The Aussie dollar fetched 72.77 US cents, 53.14 British pence, and 61.98 Euro cents in afternoon trade. Published initially as the Australian sharemarket shakes off Wall Street, commodity price falls as bargain hunters pounce on resource stocks.

Gemma Broadhurst
I am a writer by profession, and I love to write in my spare time. I am one of the most experienced writer for newspriest. I always make sure that whatever is written on my blog is 100% genuine and true. I am a University of Florida graduate pursuing a Master's degree.

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