The ASX closed at a fresh nine-week high on Wednesday as banks and tech names like Afterpay owner Block Inc made solid gains, despite sudden moves in government bond markets .
The benchmark S&P/ASX 200 closed 0.5% higher, up 36.8 points to 7377.9. The index is down less than 1% since the start of the year, compared to a 5.9% drop in the MSCI World index. Futures were weak for Wednesday’s session on Wall Street.
Brent prices rose 1.3% to US$117.01 a barrel, but U.S. crude fell 1.3% to US$110.58 a barrel.
The sudden moves in bond yields cemented expectations of future interest rate hikes and also prompted fund managers to sell tech stocks.
“Australia’s 10-year government bond yield hit 2.8% today, the highest level since October 2018, and rose 20 basis points in a single day,” said Russel Chesler, chief executive. Investments and Capital Markets at VanEck.
“Current momentum is strong and we expect the 10-year bond yield to climb more than 3% in the near term.”
His equally weighted fund has sold five stocks, including Zip and Magellan, in recent weeks as the stock price has fallen.
“Speculative tech companies that investors have favored in recent years have fallen significantly and will remain under pressure as yields rise. With inflation persisting, we favor companies with strong fundamentals.”
Gains in the banking sector saw Macquarie Group recover to $200 and Commonwealth Bank close at new five-month highs of $107.45. NAB closed at a new four-year high of $31.72 while Westpac and ANZ also improved.
Materials lagged with BHP down 0.8% and gold miners down, but lithium and nickel players improved. Boral gained 2.1% to $3.40 after falling sharply on Tuesday.
The energy sector remained stable. Santos fell 0.3% despite news of a “significant oil discovery” off the coast of Western Australia. The smaller owner of a nearby field, Carnarvon Energy, jumped 14.1% to 36.5 cents.
Kathmandu gained 3.7% to hit a four-week high of $1.27 after warning of a first-half loss of $5 million due to COVID lockdowns and disruptions.
Uniti soared before coming to a halt amid speculation it had a rival suitor.
- Unit 10.7%
- Imugene 9.6%
- Pointsbet 8.3%
- ZipCo 7.5%
- Block Inc 7.5%
The biggest drops
- Fisher & Paykel -7.9%
- Champion Iron -3.4%
- Remedy -3%
- Persée Mining -2.6%
- Silver Lake 2.3%