Beijing reports record Covid cases, Tech falls, Could ASX give back gains? At noon, up 0.4%

Australian stocks extend their relief-rally, following Anthony Albanese sworn in as Australia’s 31st prime minister. Nationals voted in a new government that has earmarked climate change, cost-of-living pressures, and cryptocurrency regulation as key policy issues to address.

At noon, the S&P/ASX 200 is 0.4 per cent or 27 points higher at 7,172. The SPI futures are pointing to a rise of 26 points.

China cuts benchmark rate again, sparks equities rally

The move follows a weekly gain in the iron ore price as China unveils record cuts to its benchmark reference rate for mortgages, bolstering hopes for economic support.

It was a much needed announcement as the country’s zero-covid policy has dealt a blow to consumer sentiment. This is the second cut this year by Beijing, a move that sparked a relief rally in equities as the world’s second-largest economy seeks to revive the housing market to support a slowing economy.

With nationals counting down to June, investors are feeling optimistic that restrictions are set to ease. This in turn saw the iron ore futures first weekly advance in five as market participants monitor the shrinking stockpiles of the steelmaking raw material, according to Mysteel data.

Material and energy stocks lead rally, 3 sectors buck the trend

What this means is that our iron ore miners are doing quite a bit of the heavy lifting this morning as the local market rallies for a second straight day.

BHP Group (ASX:BHP) added 2.1 per cent to $48.16 while Codan (ASX:CDA) has soared over 15 per cent to $7.78 after first half profit of $50 million is slated to be matched in the second half, putting it on track for record profit for this financial year.

AUD bounces, treasury yields fall, US futures soars

Meanwhile, the Aussie dollar to the greenback tapped a 2-week high, while US equities futures are up around the 1 per cent mark, following the S&P 500 falling 20 per cent from its January all-time high, before investors dipped their toes back in and snapped up stocks, reverting its decline to close flat on Friday.

Investors, however, remain cautious ahead of more retail earnings this week, keeping an eye out for more indications about the global supply chain challenges, and the health of the consumer as it contributes to 70 per cent of growth of the American economy. PMI figures are set to come in to reinforce a slow down in growth. While investors are waiting for the release of durable goods orders for the month of April, followed by the release of the latest FOMC’s latest minutes.

Thursday US GDP for first quarter is expected to show the economy contracted by 1.4 per cent on an annualised basis as well as the release of Fed’s preferred inflation gauge, PCE. Let alone the Michigan consumer sentiment survey to reinforce how low sentiment is.

You can see why investors have been very cautious as now the forward looking indicators are set to reinforce what they’ve been thinking all along.
The 10-year Australian treasury yield fell 9 basis points to 3.29 per cent, suggesting that investors are buying bonds in a flight to safety ahead of this.

Investors have rotated out of the inflation hedge stocks with Newcrest Mining (ASX:NCM), and Evolution Mining (ASX:EVN) both down 0.8 per cent each.

Stocks standouts

Designer brand clothing company Cettire (ASX:CTT) is up 15.5 per cent to 63.5 cents, continuing its rally, it’s up 10 per cent in the past 3 trading days. 3D geospatial data technology Pointerra (ASX:3DP) continues to rally, up 3.8 per cent to 27.5 cents, it soared 39.5 per cent in the past 3 trading days also.

A few stocks consolidating, Dacian Gold (ASX:DCN), down 4.5 per cent to 21 cents after surging almost 19 per cent in the past 3 trading days as well as Block (ASX:SQ2), down 3.8 per cent to $122.83, after its jump of 10.7 per cent in the same period.

Lockdown jitters renews on Beijing’s record Covid-19 cases – could we give back our gains now?

Asian markets are off to a mixed start. Shares in Japan are up 0.7 per cent, but a slide in Chinese tech stocks amid a virus outbreak in Beijing weighed on shares in Hong Kong and China.

Here is Lauren Evans with the top headlines

Codan (ASX:CDA) still expects record FY22 profit despite warning that the timing of project sales or challenges in supply chains could still impact revenues and profitability towards the end of the financial year. Shares are trading 14.5 per cent higher at $7.73.

Incitec Pivot (ASX:IPL) increased its first half earnings after seeing a “strong commodity environment” during the financial year despite inflationary pressures. Shares are trading 2.4 per cent lower at $3.65.

Antipa Minerals (ASX:AZY) said Newcrest Mining will operate the next stage of the farm-in agreement relating to the Wilki project in Western Australia. Shares in Antipa Minerals are 7 per cent higher at $0.046.

Anson Resources (ASX:ASN) announced that its drilling program at the Long Canyon No. 2 Well has reached the target depth at the top of the Mississippian units. Shares are trading 8.7 per cent higher at $0.12.

Strike Energy (ASX:STX) provided an update on its South Erregulla gas discovery. The company has mobilised the testing package and is being rigged up at the SE-1 well site with flow testing expected to start within 72 hours. Shares are trading 2.3 per cent higher at $0.31.

Imugene (ASX:IMU) is trading 5 per cent higher at $0.21 following a letter to shareholders reassuring them that the company remains in a strong position despite its recent share price decline.

BetMakers’ (ASX:BET) subsidiary Racing Technology Ireland has been contracted as the new tote technology and services provider for Norway under a 10-year agreement. Shares are trading 4.9 per cent higher at $0.54.

ANZ Bank (ASX:ANZ) has announced that Jeff Smith will join the bank’s board on August 1 as a non-executive director. Shares are trading flat at $25.50.

Australian agribusiness Elders (ASX:ELD) has outperformed in all product areas and geographies during the six months to March 31. It also upgraded its full year underlying EBIT guidance. Shares are trading 11 per cent higher at $15.20.

Local economic news

Following increases in January and February this year, household spending rose again in March by 6.6 per cent compared to a year ago, according to the Australian Bureau of Statistics.

Through the year, household spending increased the most for recreation and culture, up 17.8 per cent, clothing and footwear, up 15.2 per cent, and transport, up 12.5 per cent.

Victoria and Queensland were both up 8.5 per cent, and were the states with the highest increase in household spending through the year.

Best and worst performers

The best-performing sector is materials, up 1.5 per cent. The worst-performing sector is health care, down 0.4 per cent.

The best-performing stock in the S&P/ASX 200 is Codan (ASX:CDA), trading 15.3 per cent higher at $7.79. It is followed by shares in Elders (ASX:ELD) and Imugene (ASX:IMU).

The worst-performing stock in the S&P/ASX 200 is Incitec Pivot (ASX:IPL), trading 3.6 per cent lower at $3.60. It is followed by shares in Block (ASX:SQ2) and PolyNovo (ASX:PNV).

Commodities and the dollar

Gold is trading at US$1851.66 an ounce.
Iron ore is 5.3 per cent higher at US$136.25 a ton.
Iron ore futures are pointing to a rise of 5.13 per cent.
One Australian dollar is buying 70.84 US cents.

Sources: Bloomberg, FactSet, Trading Economics, ABS