A charmed run for Australian shares has continued as one analyst wonders whether higher bond yields and the prospect of rate hikes are about to skittle the market.
The ASX closed higher for a fifth day of the past six despite the US hiking rates last week and Russia’s war on Ukraine keeping energy prices higher.
A broad-based rally on Wednesday helped shares higher by half a per cent and overcame a lull in commodity stocks.
IG Markets analyst Kyle Rodda noted the ASX momentum came despite higher bond yields.
The Australian government 10-year bond yield was up to 2.76 per cent.
Mr Rodda said moves higher in yields, prompted by expectations of rising rates, were usually kryptonite for stocks.
The bond market is much bigger than its shares equivalent and the former’s behaviour usually has consequences for equities.
“When the bond market is moving the way it is, more often than not its mighty weight pulls the equity market into line,” Mr Rodda said.
“All we can do is wait and see.”
Investors favoured ASX technology shares, which were best and rose three per cent.
The heavyweight category of financials was next best and improved by about one per cent.
Materials was the only category lower, dropping less than half a per cent.
The benchmark S&P/ASX200 index closed up 36.8 points, or 0.5 per cent, to 7377.9 points.
The index is less than 300 points from its record high in August last year.
The All Ordinaries index closed higher by 44.3 points, or 0.58 per cent, to 7665 points.
In company news, Santos claimed a significant oil discovery off the coast of Western Australia.
Boss Kevin Gallagher said the discovery could add value to its US$2 billion Dorado oil and gas project.
Santos was little changed at $7.77.
Telecommunications services provider Uniti Group jumped after reports a second group has bid for the company.
Uniti stopped trading while higher by 10 per cent to $4.67. It will soon provide details.
Outdoor clothing group KMD Brands posted a first-half loss, blamed on higher freight costs and coronavirus impacts.
The operator of Kathmandu, Oboz and Rip Curl lost $A5.1 million in the six months to January 31.
Investors will still pocket a fully franked interim dividend of three NZ cents per share, which is more than the previous interim payout.
KMD Brands was up three per cent to $1.27.
Respiratory care provider Fisher & Paykel forecast full-year revenue to be less than the previous one.
The company said the Omicron variant of COVID-19 was requiring less respiratory intervention, and a mild flu season had unfolded in the northern hemisphere.
Operating revenue for the year ending March 31 was forecast between NZ$1.67 billion and NZ$1.7 billion. This would be down from NZ$1.97 billion 12 months ago.
Fisher & Paykel was down seven per cent to $23.73.
Investors abandoned fashion group Cettire after founder Dean Mintz sold almost 10 per cent of company stock for $47.2 million.
Mr Mintz said the sale was a small portion of his stake and he would not sell more shares before the full-year earnings.
He retains a 56 per cent stake in the business.
Cettire dropped 13 per cent to $1.34.
In mining, BHP eased after a gain of five per cent a day earlier. The market giant fell less than one per cent to $48.44.
Among the banks, the Commonwealth and NAB were best and each improved one per cent to $107.45 and $31.72 respectively.
The Australian dollar was buying 74.58 US cents at 1721 AEDT, higher from 73.88 US cents at Tuesday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed up 36.8 points, or 0.5 per cent, to 7377.9 points on Wednesday.
* The All Ordinaries index closed higher by 44.3 points, or 0.58 per cent, to 7665 points.
* At 1721 AEDT, the SPI200 futures index was up eight points, or 0.11 per cent, at 7357 points.
CURRENCY SNAPSHOT
One Australian dollar buys:
* 74.58 US cents, from 73.88 cents on Tuesday
* 90.30 Japanese yen, from 88.98 yen
* 67.57 Euro cents, from 67.29 cents
* 56.15 British pence, from 56.30 pence
* 107.25 NZ cents, from 107.51 cents.
Steven Deare
(Australian Associated Press)