A mid-session turnaround on the ASX helped investors end the day with minor gains, while an investment strategist wondered whether more companies might upgrade earnings guidance after Premier Investments’ strong report.
The S&P/ASX200 benchmark index closed higher by 7.5 points, or 0.11 per cent, to 6686.6 on Wednesday.
The All Ordinaries closed better by 14.8 points, or 0.21 per cent, at 6953.9.
The indices were lower at 1200 AEDT – the ASX200 down 0.26 per cent – but recovered.
The financial sector was mostly lower for the first three hours of trade but closed better by 0.17 per cent. Each of the big four banks had gains of less than one per cent.
Materials also improved and closed 0.68 per cent better.
Energy was the standout performer. The sector rose 4.25 per cent after oil prices hit an 11-month high just below $US57 a barrel, bolstered by Saudi Arabia’s plans to limit supply.
The ASX result was similar to those of US markets, which had minor gains.
Investsmart market strategist Evan Lucas said the minor gains and Tuesday’s minor losses were typical of January when resources companies were yet to resume production updates and central banks were on holiday.
He said investors may also have settled after US president-elect Joe Biden’s Democrats secured the balance of power in Congress last week.
Companies are due to report first-half earnings from February, which may be another reason for caution.
Premier Investments, which owns Just Jeans, Portmans and Smiggle, gave reason for optimism.
Premier said first-half 2021 earnings before tax were expected to be 75 to 85 per cent better than the 2020 equivalent and would produce earnings of between $221 million and $233 million.
Shares reached a record $26.70 then closed better by 12.72 per cent to $25.35.
Mr Lucas said investors may see more positive earnings guidance.
Since the pandemic, many companies opted not to give guidance.
Yet Mr Lucas said economic data from the second quarter, such as retail spending’s 7.1 per cent rise in November, suggested some companies did better than expected.
“You could make the argument from the economic data that we got slightly euphoric in the second quarter, and that will benefit discretionary spending,” he said.
However some industries were more likely to give bad news.
“I’d be watching banks, travel and insurance companies which are all really starting to understand where their numbers sit in a COVID world,” Mr Lucas said.
“They’re the ones you may get guidance from on the downside.”
Unemployment looks set to improve with job vacancies rising as the economy recovers from last year’s recession.
The Australian Bureau of Statistics said job vacancies in the November quarter jumped 23.4 per cent to be 12 per cent higher than a year earlier and surpassed pre-COVID levels.
Lawyers are touting shareholder legal action against payments provider Tyro, as many businesses have been unable to use EFTPOS terminals for more than a week.
A software problem has left customers unable to collect payments.
Shares closed lower by 2.08 per cent to $2.83.
Energy companies prospered following the rise in oil prices.
Oil Search closed better by 6.22 per cent to $4.44. Woodside rose 5.37 per cent to $26.68.
In mining, BHP rose 0.48 per cent to $46.22, Fortescue gained 0.16 per cent to $25.17 and Rio Tinto lost 0.55 per cent to $120.74.
The Aussie dollar was buying 77.65 US cents at 1720 AEDT, higher from 76.91 US cents at the close of trade on Tuesday.
ON THE ASX
* The S&P/ASX200 benchmark index closed higher by 7.5 points, or 0.11 per cent, to 6686.6.
* The All Ordinaries closed better by 14.8 points, or 0.21 per cent, at 6953.9.
* At 1720 AEDT, the SPI200 futures was stable at 6615 points.
One Australian dollar buys:
* 77.65 US cents, from 76.91 cents on Tuesday
* 80.51 Japanese yen, from 80.30 yen
* 63.58 Euro cents, from 63.42 cents
* 56.77 British pence, from 56.90 pence
* 107.48 NZ cents, from 107.41 cents.