Australia's sharemarket defied escalating US-Iran military tensions to close higher on Wednesday, with supermarket giants Woolworths and Coles surging almost 10 per cent over the past week.
The benchmark ASX 200 added 49.10 points, or 0.57 per cent, to 8653.30, while the broader All Ordinaries added 32.20 points, or 0.36 per cent, to 8857. The Australian dollar slipped 0.06 per cent to buy 70.20 US cents. Eight of 11 sectors ended higher, led by consumer staples and discretionary stocks. Offsetting the gains were two per cent falls in technology and falling materials stocks.
Supermarket Giants Lead Gains
Woolworths leapt 3.15 per cent to $37.63, Coles rallied 4.95 per cent to $23.73 and Endeavour Group surged 5.39 per cent to $3.13. Woolworths shares have rallied 9.58 per cent in the past five days of trading.
Consumer discretionary giant Wesfarmers ascended 4.25 per cent to $83.39, JB Hi-Fi closed 3.50 per cent higher to $76.02 and Harvey Norman surged 4.39 per cent to $4.76.
Tech Stocks and Commodities
Offsetting the gains were technology stocks including Xero which dropped 2.04 per cent to $76.82, Megaport which slumped 5.20 per cent to $18.05 and Next DC which closed down 4.12 per cent to $15.14.
Brent Crude oil prices rose two per cent to $US93 ($A132), while the price of spot gold fell to $US4200 an ounce as the US and Iran exchanged blows. Reports emerged that the US struck Iranian sites near the Strait of Hormuz, which US President Donald Trump said was in retaliation to Tehran shooting down a US Apache helicopter in Oman. Iran fired retaliatory attacks targeted at Kuwait, Bahrain and Jordan.
Gold prices continue to be under pressure since the start of the Middle East war due to higher inflation and potential a rise in US rates makes bonds and bank accounts more attractive compared to non-yielding assets such as the precious metal.
Market Commentary
Global X senior product and investment strategist Marc Jocum said risk sentiment weighed on the market. “Escalating tensions in the Middle East following US military air strikes, which pushed oil prices higher and reminded investors that geopolitics remains an ever-present wildcard,” he said. “At the same time, markets are nervously awaiting tonight’s US inflation data following last week’s stronger-than-expected jobs report, with concerns that sticky inflation could keep the Federal Reserve in tightening mode for longer.”
Company News
In company news, Chemist Warehouse parent company Sigma Healthcare shares slumped 5.48 per cent to $2.76 after telling the market it held early discussions for a potential takeover of UK health and beauty retailer Boots. Sigma Healthcare said the talks were preliminary and there was no certainty the transaction would eventuate.
Northern Star Resources shares slumped 3.54 per cent to $18.54 on another rough trading session, after releasing a letter to shareholders confirming it had rejected suggestions from Elliott Investment Management that it should be sold. The US hedge fund owns three to four per cent of Northern Star Resources.
IGO Limited shares also dropped 6.01 per cent to $8.44 after a fire occurred at the Chemical Grade Plant 3 facility at its Greenbushes lithium operation on Tuesday.
Newly listed defence technology company Boresight ascended 67.50 per cent on its debut, following an $8m initial public offering for 20 cents per share. By close of business it was priced at $0.335.
Steadfast Group also soared on Wednesday following a takeover bid at $6 per share, which is 51 per cent above the previous close. Shares closed on Wednesday at $5.38.
