BHP, Rio propel ASX to new high; why are material shares surging today?

Summary

  • The S&P/ASX200 opened higher and gained 0.5% to hit an all-time high of 7,433.5. 
  • The market rally was driven by solid gains across material, energy and A-REIT sectors.
  • Iron ore miners BHP and Rio Tinto hit their respective highs this morning.
  • NSW recorded 172 new locally acquired COVID-19 cases in the past 24 hours.

Australian shares scaled a new record once again high today, with the benchmark index, ASX200, touching a fresh all-time high, driven by solid buying across mining, energy and realty stocks. The equity market witnessed bullish trend despite rise in COVID-19 cases as investors shifted focus to corporate earnings.      

The S&P/ASX200 was trading higher by 24.80 points or 0.34% to 7,419.10 by noon. Early today, the index opened higher and gained as much as 0.5% to hit an all-time high of 7,433.5. 

The gains were led by iron ore miners BHP and Rio Tinto, which hit their respective highs this morning. Among others, BlueScope Steel and Mineral Resources also surged to touch their record high.  

On the sectoral front, six of the eleven sectors were trading in green. Material was the best performer with 1.5% gain, followed by energy which surged over 1 per cent. Among others, A-REIT, industrial and financial were trading higher with modest gains.             

                       

The Mid Market Pulse || BHP, Rio Propel ASX To New High; What Caused A Rally In Material Stocks?

 

On the flip side, information technology was the worst performer, down 0.9%. Some of the other sectors that witnessed selling pressure include health care, utilities and consumer staples.  

On the COVID front, the state of New South Wales recorded 172 new locally acquired COVID-19 cases in the 24 hours, compared to yesterday’s tally of 145. Victoria has reported 10 new local cases, while the state has decided to end lockdown from midnight, with schools and some workplaces set to open again tomorrow.

Meanwhile, a data by ANZ and Roy Morgan showed that the weekly measure of consumer confidence dropped 3.5% to the lowest level since November last year, as the resurgent of COVID-19 restriction dented sentiment. The confidence levels in Melbourne slipped 6.4%, while in Sydney it fell 2.2%, which is most affected with the highly transmissible delta variant. However, confidence levels remain well above the lows seen in the early stages of the pandemic, which suggests that the economic disruption from the current lockdowns will be minimal.

Top gainers and losers

Image Source: Copyright © 2021 Kalkine Media

Copper miner OZ Minerals Limited (ASX: OZL) was the top percentage gainer on the ASX, rising nearly 8%. OZL shares surged after the blue-chip miner reported 22% growth in copper production in the June quarter.

Some of the other notable gainers were engineering company Worley Limited (ASX: WOR), English bank Virgin Money UK PLC (ASX:VUK), real estate major Unibail-Rodamco-Westfield (ASX:URW) and steel manufacturer BlueScope Steel Limited (ASX:BSL).

On the flip side, gold miner Silver Lake Resources Limited (ASX:SLR) was top loser on ASX pack, extending fall for the second session and dropped over 3%.

Some of the other worst performers were dairy nutritional firm A2 Milk Company Limited (ASX: A2M), health care firm Pro Medicus Limited (ASX: PME), biopharma major Clinuvel Pharmaceuticals Ltd. (ASX:CUV) and casino operator Crown Resorts Limited (ASX:CWN).

Shares in news

Shares of online furniture retailer Temple & Webster Group (ASX: TPW) surged over 7% on strong earnings. The company reported 85% growth in revenue to AU$326.3 million for the full financial year ending 30 June 2021.

Mining and construction services provider NRW Holdings’ (ASX: NWH) shares rose over 1% on securing two contracts. In an exchange filing, the company said it has bagged two contracts with a combined contract value of around AU$90 million.

The share price of Oil Search (ASX: OSH) was up 1% after the company maintained its guidance for FY21. The energy company said it is on track to deliver full year 2021 production and capital expenditure guidance.

Shares of Japara Healthcare (ASX: JHC) rallied over 18% after its board backed takeover bid by Calvary. The company said it has entered into a scheme implementation deed with Little Company of Mary Health Care (Calvary) for the acquisition of issued shares in Japara.

Shares of Rio Tinto (ASX: RIO) surged as much as 2.5% to hit 52-week high even after the world's leading miner lowered Canada aluminum production. The company has taken this decision after it failed to agree on a new collective labour agreement with a local union.

The share price of BlueScope Steel (ASX:BSL) climbed over 3% on strong earning guidance. The steel producer expects preliminary unaudited underlying earnings before interest and tax (EBIT) for FY21 to be approximately AU$1.72 billion.

Shares of SomnoMed (ASX: SOM) rose over 6% after the company reported rise in quarterly revenue. For the June quarter, the sleep-related treatment solutions provider reported 91% jump in unaudited revenue at AU$16.2 million, compared to year-ago period. The full-year unaudited revenues increased by 9% over previous corresponding period to AU$62.7 million.

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