Australian sharemarket rallies, travel stocks jump as NSW scraps quarantine for international arrivals
The Australian sharemarket ended the week on a high note, with travel stocks taking off after NSW Premier Dominic Perrottet announced the state would open up again to the world in a fortnight.
The benchmark S&P/ASX200 index closed 0.69 per cent higher at 7362 while the All Ordinaries Index gained 0.71 per cent to 7674.2.
CommSec analyst Steven Daghlian noted it was the second straight day of gains, saying it followed a positive lead from Wall Street, which was boosted by solid profit results from companies such as Morgan Stanley and Citigroup, and well-received news on the labour market and inflation.
The local bourse ended the past two weeks in positive territory, Mr Daghlian said.
OMG chief executive Ivan Tchourilov said the first week-on-week gain since September came after a broad correction triggered by international headwinds.
“Capital markets are picking up steam as we head into the Christmas period, capped off this week with the heavily oversubscribed Judo Bank IPO,” he said.
“The SME lender is listing November 1st to heavy fanfare, with Openmarkets’ own capital markets team setting a new record in bidding value.”
Flight Centre jumped 3.77 per cent to $22.56, Regional Express rallied 6.12 per cent to $1.56, Webjet lifted 4.05 per cent to $6.43, Corporate Travel Management rose 2.69 per cent to $23.67 and Qantas put on 1.97 per cent to $5.69 after Mr Perrottet declared that from November 1, fully vaccinated international arrivals into Sydney would not need to quarantine either at home or in hotels.
Prime Minister Scott Morrison later told reporters it would be Australian citizens, residents and their immediate family members who would be allowed in, rather than tourists, students and skilled workers.
It comes as NSW races towards its 80 per cent double dose target.
Qantas said it would bring forward the restart of its international flights by two weeks to November 1.
The national carrier also announced it had inked a deal to sell 13.8 hectares of “largely surplus” land in Mascot for $802m, with the funds to be used to reduce debt and accelerate the airline’s recovery from the impacts of the pandemic.
Flight Centre managing director Graham Turner said the NSW government’s decision was “obvious, sensible, and the right way to go”.
Mr Daghlian noted travel stocks had been on the up for a couple of months.
Dacian Gold soared 13.64 per cent to 25 cents - bang on Macquarie’s target price for the company - while iron ore miner Flinders Mines surged 12.67 per cent to 84.5 cents.
Flinders reported a fire at its Pilbara project in Western Australia, saying personnel had been evacuated, and there had been no injuries or damage to equipment or facilities.
BHP advanced 2.8 per cent to $38.86 and Fortescue strengthened 1.96 per cent to $14.60.
Rio Tinto missed out on the rally, dropping 0.9 per cent to $99.60 after posting its third quarter production results downgrading its full-year Pilbara shipments guidance, blaming delays to the completion of a new greenfield mine at Gudai-Darri and the Robe Valley brownfield mine replacement project due to WA’s tight labour market.
The mining giant also cut other guidance, including for iron ore production in Canada.
“Overall, it was another underwhelming quarterly from Rio but we remain attracted to the stock on valuation, net cash balance sheet and free cash flow yield,” Ord Minnett said.
Macquarie Research described the result as “in-line to slightly weak ... overshadowed by the downgrades to the CY21 iron ore, bauxite and copper production and shipment guidance ranges”.
ANZ added 1.05 per cent to $27.87, Commonwealth Bank firmed 0.36 per cent to $102.28, National Australia Bank inched seven cents higher to $28.65 and Westpac improved 0.48 per cent to $25.39.
Investment bank Macquarie Group rose 3.66 per cent to $189.56.
“A lot of value went into our banks this week, who made up the bulk of the most purchased securities through Openmarkets,” Mr Tchourilov said.
“Major dips in banking prices have been quickly bought up by our retail investors, who are looking to bag a blue chip on discount.
“The talk of the town this week are inflation and rate hikes, which are beneficial for the banks overall.
“These give the banks an opportunity to widen their margins, but only if lending allowances stay loose and economic growth can keep pace.”
Insurance Australia Group backtracked 3.15 per cent to $4.92 after acknowledging ASIC had kicked off Federal Court proceedings relating to its failure to pass on the full amount of discounts to a significant number of NRMA home, motor, caravan and boat insurance customers between March 2014 and September 2019.
IAG said it self-reported the issue, reviewed its pricing commitments and promises across its products, and identified affected customers to provide refunds.
“IAG apologises for this failure, recognises the significance and that this was unacceptable, and is putting this right for its customers as soon as possible,” the insurer said.
Treasury Wine Estates slumped 5.37 per cent to $11.63 after providing a quarterly update.
“International supply chain woes are having the biggest impact, with international revenue streams underperforming,” Mr Tchourilov said.
“Chinese tariffs on Australian wine remain in place, which aren’t helping much either.
“Alcohol consumption levels have been sustained during the lockdown, giving modest growth to domestic revenues.
“Although they’ve missed guidance this time around, the long-term picture is still peachy for Treasury, and they’ll look to strengthen into the back half of next year.”
In the tech sector, buy-now-pay-later market leader Afterpay added 1.74 per cent to $122.78, data centre operator NEXTDC gained 1.49 per cent to $12.23, accounting software firm Xero improved 0.92 per cent to $144.35 and logistics software provider Wisetech Global firmed 0.77 per cent to $53.92.
The Aussie dollar was fetching 74.24 US cents, 54.27 British pence and 63.95 Euro cents in afternoon trade.
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