ASX advance loses steam as RBA spooks investors

The Australian sharemarket’s advance lost steam on Tuesday afternoon after the Reserve Bank of Australia abandoned its reference to being patient with regard to adjusting monetary policy, suggesting an interest rate increase could be imminent.

The S&P/ASX 200 Index climbed 0.2 per cent, or 14.2 points, to 7527.9. The broader All Ordinaries Index advanced the same amount to 7833.2.

The local market took a strong lead from Wall Street where all three major benchmarks rose, led by a 1.9 per cent rally by the Nasdaq on news that Elon Musk has acquired a 9.2 per cent stake in Twitter.This translated to a 0.3 per cent gain for the Australian sharemarket at the open, which it built on throughout the morning, reaching as high as 7573.4, just 0.8 per cent shy of the bourse’s record level.

But the benchmark trimmed its gains and the Aussie dollar spiked to its highest level since June following RBA governor Philip Lowe’s statement on monetary policy that implied a sooner path to an interest rate rise.

Musk lifts tech

Similar to Wall Street, the local technology sector led the market, rising 3.1 per cent. Block climbed 6.2 per cent to $191.44, Novonix rose 4.9 per cent to $7.26, Altium added 3.2 per cent to $35.40, and Xero firmed 4.5 per cent to $108.

IGO Group’s hopes of acquiring nickel miner Western Areas have been dealt a blow after the independent expert assessing the $1.09 billion valuation on the deal found it was not a fair price.

IGO said it believed the Western Areas board would shortly reverse the recommendation they made in December when they encouraged shareholders to accept the deal. Shares in IGO fell 2.9 per cent to $14.56.

Mineral Resources jumped 5.7 per cent to $59.67 after announcing it has agreed with its joint venture partners to increase production from the Wodgina and Mt Marion spodumene mines in Western Australia responding to “unprecedented global customer demand for lithium product”.

Citi’s sell-side research analysts declared Perpetual’s merger with Pendal, revealed on Monday, could be earnings-per-share accretive, but there are plenty of execution risks.

Perpetual shares added 1.3 per cent to $32.38 and, Pendal rose 1.5 per cent to $5.37.

The big banks had a mixed session: Commonwealth Bank added 0.6 per cent to $104.36, National Australia Bank rose 0.3 per cent to $32.18, Westpac firmed 0.6 per cent to $24.05, while ANZ declined 0.3 per cent to $27.04.

The price of iron ore rose to its highest level in a month on Monday. Iron ore tracked by S&P Platts rose 0.6 per cent to $US160.80 a tonne. S&P Platts said that “iron ore prices rose as demand expectations remained positive in the near term”, helped along by “demand supported by rising steel prices and lower steel stocks in China”.

BHP fell 1 per cent to $51.95, while Rio Tinto declined 0.4 per cent to $120.24, but Fortescue rose 0.1 per cent to $21.72.

Oil advanced for a second day as the US and Europe prepared to impose a fresh wave of sanctions on Moscow for reported atrocities committed by Russian soldiers against civilians in Ukraine.

Ampol rose 3 per cent to $31.30, Woodside Petroleum climbed 2.8 per cent to $33.93 and Viva Energy firmed 3 per cent to $2.43.

Navigator Global Investments upgraded its earnings guidance for financial 2022 after strong investment performance in the first two months. The company’s adjusted EBITDA is expected to be between $US43 million ($57.2 million) and $US45 million, up from its previous forecast of $US40 million to $US42 million. Net profit is forecast between $US33 million and $US35 million. The stock rallied 15.1 per cent to $1.83.