Australian sharemarket surges in early trade then fades as investors fret about inflation

The Australian sharemarket closed barely changed for the third straight day after once again rallying in early trade then failing to maintain momentum.

The S&P/ASX200 closed 22.4 points or 0.31 per cent lower at 7270.2 while the All Ordinaries Index dipped 20.3 points or 0.27 per cent to 7522.

CommSec analyst Steve Daghlian described early trade as choppy.

“This is the seventh time in less than two weeks that the market has been hitting record high after record high, so there has been quite a bit of momentum from our market since the start of this month,” Mr Daghlian said.

“Having said that, we’ve seen the enthusiasm certainly dying down after that strong start today.”

Westpac data showed consumer confidence had fallen by about 10 per cent in two months, not helped by lockdowns in Victoria, he noted.

“But keep in mind back in April we had consumer confidence hitting an 11 year high, so coming off quite a high base on that front.”

Also notable was the biggest jump in factory inflation in China since 2008, partly due to higher commodity prices.

“This is getting perhaps the market talking again about concerns of high global inflation,” Mr Daghlian said.

OMG chief executive Ivan Tchourilov said markets were cautious heading into Friday when the US Federal Reserve would release consumer price index data.

“Inflation and rising interest rates have been the biggest threat to derailing equity markets this year, so any data being released around this is being watched very closely,” Mr Tchourilov said.

Rio Tinto added 0.52 per cent to $124.80, BHP put on 0.6 per cent to $48.67 and Fortescue rose 1.03 per cent to $22.65.

“We had a near 4 per cent lift in the iron ore price (and) gains across most metals as well,” Mr Daghlian said.

He said travel stocks held up well after only one new locally acquired Covid case emerged in Victoria overnight and authorities announced Melbourne’s lockdown would lift on Friday.

Flight Centre firmed 1.23 per cent to $15.68 and Webjet strengthened 1.56 per cent to $5.20.

Regional Express slid 0.4 per cent to $1.25 after downgrading its full-year guidance from a break-even situation to a statutory loss of about $15m.

Australian sharemarket surges in early trade then fades as investors fret about inflation

Camera IconThe Victoria lockdowns have hit Rex hard. Emma Brasier/AAP Credit: News Corp Australia

“The latest Covid-related state border restrictions and lockdowns have severely disrupted Rex’s domestic and regional networks, forcing Rex to cancel a large number of flights to/from Melbourne,” the airline said.

Brickworks hit an intraday high of $23.54 after providing a trading update flagging record property trust earnings this financial year amid a big appetite for prime industrial assets.

That’s especially the case in western Sydney, where the company and joint venture partner Goodman Group are building the southern hemisphere’s first Amazon robotics fulfilment centre, with completion expected in the next six months or so.

“The even larger Coles distribution warehouse is now under construction, with completion of this facility scheduled early in financial year 2023,” Brickworks managing director Lindsay Partridge said.

Brickworks also reported gathering sales momentum in its building products businesses in Australia and North America, helped locally by a surge in housing approvals, although availability of some materials is a problem in certain areas.

Shares in the company finished 11.3 per cent higher at $23.40.

Shipbuilder Austal firmed 0.43 per cent to $2.32 after winning a $44m US Navy contract.

A Federal Court judge dismissed Chevron’s claims that sought to restrict Ampol’s use of the red forecourt canopy in the design of its rebranded petrol stations, with more than 250 sites already transitioned.

Australian sharemarket surges in early trade then fades as investors fret about inflation

Camera IconThe Ampol brand hadn’t been seen for 25 years until recently. NCA NewsWire/Brenton Edwards Credit: News Corp Australia

They were previously branded Caltex under Ampol’s Caltex Australia partnership with Chevron, which sold its half-stake in 2015 but didn’t terminate the right to use the brand until December 2019.

Ampol will not, however, be able to use the StarCard brand in some of its advertising.

Shares in Ampol eased 0.1 per cent to $29.72.

Mr Tchourilov said New Zealand-based casino operator SkyCity continued its recovery after being crucified earlier this week when financial crimes regulator AUSTRAC named the company in a money laundering investigation, alleging potential serious noncompliance at its Adelaide venue.

“Openmarkets traders have taken the recent sell-off as a buying opportunity, with the stock the single most-purchased stock today,” he said.

SkyCity shares gained 3.45 per cent to $3.30.

In the tech sector, Appen lost 3.9 per cent to $12.83 and Altium sank 7.5 per cent to $34.30, two days after it rejected a $38.50 per share takeover offer from Nasdaq-listed Autodesk, while Afterpay put on 1.69 per cent to $98.84.

ANZ softened 0.1 per cent to $28.73, Commonwealth Bank shed 0.39 per cent to $101.08, National Australia Bank backtracked 0.78 per cent to $26.56 and Westpac declined 0.67 per cent to $26.55.

The Aussie dollar was buying 77.46 US cents, 54.68 British pence and 63.55 Euro cents in afternoon trade.

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