Aussie shares are lifting for the fifth time in six days, with the ASX 200 up 1.14 per cent to 7,161, hitting a fresh 14 ½ month high and inching towards an all-time high. This follows a solid lead from Wall Street and record high iron ore prices.
The market is being pushed higher by a 5 per cent lift in iron ore prices which have hit a record high of US$212 per tonne. Putting this in perspective, iron ore was trading at ~US$80 per tonne in April 2020. Strong demand from China has continued to keep prices supported. Fortescue (FMG), BHP and Rio Tinto (RIO) are lifting by between 2.7 per cent – 6 per cent.
Casino operators are in focus after Crown (CWN) received a takeover offer from rival The Star Entertainment Group (SGR). Stocks in both companies are higher. A2 Milk (A2M) is slumping by ~11 per cent and has hit a 3 ½ year low after lowering its forecasts for the fourth time since September. The pandemic has kept borders closed, which has brought its key Daigou channel with China to a standstill. The infant formula company’s Asia Pacific Chief Executive, Peter Nathan has announced his resignation and the company has started a review of its business. It is now forecasting a profit margin of 11-12 per cent this year (down from 25-26 per cent it flagged at its third profit downgrade in February).
Some of the banks could weigh on the market this week as three of the big four trade ex-dividend. ANZ is down 1.1 per cent after trading ex-dividend for its 70c per share payment, which is due to be paid to eligible shareholders on 1 July.
No new cases of COVID-19 were identified in NSW in the 24 hours to 8pm AEST last night. Travel stocks are mixed. Shares in Flight Centre (FLT), Webjet (WEB) and Sydney Airport (SYD) are lifting by ~1.5 per cent while Qantas (QAN) is down 0.5 per cent. Most travel stocks declined last week on news of the two locally acquired cases in Sydney.
Woolworths (WOW) is up 2.7 per cent. The supermarket chain said it has decided that a demerger of its Endeavour Drinks business is the best option for the group and ‘…is likely to enhance shareholder value over time and is preferable to other available options.’
2.8bn shares have changed hands so far today, worth $2.8bn. 748 stocks are up, 573 are down and 382 are unchanged.
The release of the Federal Budget tomorrow at 7:30pm AEST is likely to be a highlight this week. With many of the government’s initiatives well telegraphed, the document tends to not have a clear and immediate impact on the market. This is expected to be a ‘pandemic budget’. The government has made it clear the focus is on economic growth, job creation and pushing unemployment lower rather than reducing deficits.
Published by CommSec