Investors buying ASX as rates put on hold

Steven Deare | March 1, 2022

Investors are betting central banks will not raise rates until there is more certainty about the Ukraine war, as the ASX closed higher for a third consecutive day.

Technology shares benefit most from the current low rates and were the favourites on Tuesday. They jumped five per cent.

The Reserve Bank earlier kept the cash rate at a record low 0.1 per cent and said the Ukraine war was a major source of uncertainty.

Russia’s invasion has caused surges in oil prices and commodities, which could distort inflation. A barrel of Brent crude oil traded for $US99.11.

IG Markets analyst Kyle Rodda claimed investors had assumed a holding pattern in financial conditions.

“Traders are pricing out rate hikes from central banks right now because of the conflict,” he said.

That thinking may have guided the run on technology stocks, which take longer to generate earnings.

The biggest technology provider on the ASX, Afterpay-owner Block, rocketed 12 per cent to $175.16.

Saxo market strategist Jessica Amir said the gain was likely due to a big increase in the price of Bitcoin.

US payments giant Block makes most of its money from its Bitcoin investment.

Elsewhere on the ASX, there were gains of one per cent for stocks in industrials, consumer discretionaries, financials and telecommunications.

The benchmark S&P/ASX200 index closed up 47.4 points, or 0.67 per cent, to 7096.5 points.

The ASX200 is a little more than 500 points from its record high, set in August last year.

The All Ordinaries index closed higher by 62.1 points, or 0.85 per cent, to 7385.3 points.

In company news, the operators of Crown’s Melbourne and Perth casinos are being taken to court by Australia’s financial intelligence agency over alleged breaches of anti-money laundering and counter-terrorism laws.

AUSTRAC served the operators with a statement of claim and started civil penalty proceedings in the Federal Court.

Crown was little changed at $12.37.

The Commonwealth Bank is selling most of its stake in a Chinese institution as it focuses on Australia.

The Australian bank is selling a 10 per cent stake in Bank of Hangzhou to a Chinese group for $1.8 billion.

The Commonwealth Bank will retain a shareholding of about five per cent.

CBA shares were up one per cent to $94.82.

All the big four banks gained although NAB was the only other one to improve by as much as one per cent. NAB closed at $29.37.

Trading resumed in buy now, pay later providers Sezzle and Zip after news of their $491 million merger a day earlier.

Zip sold shares to fund its purchase of Sezzle and investors had contrasting reactions to the two stocks.

Zip was down six per cent to $2.07.

Sezzle was up nine per cent to $1.95.

Investors swung behind Yancoal after it returned to full-year profit, helped by lofty coal prices.

The company had a net profit after tax of $791 million and will resume paying dividends.

The company will benefit while coal prices stay at record levels although it warned wet weather and coronavirus could affect earnings.

Yancoal was up 14 per cent to $4.00.

Among the major miners, Fortescue had the steepest loss and dropped two per cent to $17.76. BHP and Rio Tinto shed less than half a per cent each.

Insurer IAG said it was too early to determine the financial impact from the flooding of parts of Queensland and NSW.

About 6700 claims had been lodged with IAG businesses as of early Tuesday although this is expected to rise.

IAG was unchanged at $4.60.

UK private equity group CapVest Partners raised its offer for fertility specialists Virtus Health.

CapVest has offered $7.80 per share (or $667 million), more than the $7.60 per share offered in January.

The suitor may also make an off-market takeover bid offering $7.70 per share.

Virtus, no longer talking to BGH Capital about its offer, was up four per cent to $7.80.

The Australian dollar was buying 72.69 US cents at 1731 AEDT, more than the 71.85 US cents at Monday’s close.

ON THE ASX

* The benchmark S&P/ASX200 index closed up 47.4 points, or 0.67 per cent, to 7096.5 points on Tuesday.

* The All Ordinaries index closed higher by 62.1 points, or 0.85 per cent, to 7385.3 points.

* At 1731 AEDT, the SPI200 futures index was up 15 points or 0.21 per cent to 7061 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 72.69 US cents, from 71.85 cents on Monday

* 83.66 Japanese yen, from 83.02 yen

* 64.92 Euro cents, from 64.38 cents

* 54.18 British pence, from 53.78 pence

* 107.33 NZ cents, from 107.37 cents.