The Australian sharemarket climbed firmly into the green after Russia announced it was pulling back some troops from Ukraine’s border, with sentiment further boosted by a flurry of strong half-yearly earnings reports from local companies.
The benchmark S&P/ASX200 index closed 1.08 per cent higher at 7284.9 while the All Ordinaries Index gained 1.1 per cent to 7573.
CommSec analyst Steven Daghlian said Russia’s move had settled nerves of an imminent military conflict and Wall Street had its first gain in four days.
“President Putin also said that Moscow was willing to negotiate,” Mr Daghlian said.
“Having said that, European and US officials still say there’s no evidence of a very significant drawdown of forces.
“This is going to be something to continue to watch.”
OMG chief executive Ivan Tchourilov said the news buoyed sentiment, “but investors should keep in mind that the game of world superpower chicken isn’t over yet”.
IG market analyst Kyle Rodda said a drop in oil and gold prices suggested the probabilities of war in Ukraine were diminishing.
“Locally, earnings have also proven a driver of price action,” he said.
“Health care stocks have underpinned the ASX’s strength, after CSL delivered earnings and largely exceeded revenue and earnings estimates, while suggesting the worst of the pandemic related supply disruptions are behind it.”
Shares in the market heavyweight rocketed 8.5 per cent to $263.69.
Mr Tchourilov said Pro Medicus was another standout in the sector, rising 3.6 per cent to $48 after booking a near 53 per cent net profit surge.
He said real estate was also a highlight, with shopping centre owner Vicinity Centres leaping 11 per cent to $1.86 after a spectacular, $1.04bn return to profitability.
Lifestyle Communities, which targets downsizers, got an upgrade from analysts a day after reporting its results, bouncing 5.07 per cent to $18.46.
“Lithium miners lit up the materials sector after Liontown Resources announced a binding agreement to supply Tesla with lithium spodumene concentrate,” Mr Tchourilov said.
Liontown soared 17.99 per cent to $1.64, while Pilbara Minerals put on 3.69 per cent to $3.09 and Allkem appreciated 6.29 per cent to $9.47.
Fortescue dropped 2.04 per cent to $21.15 after delivering its results and disappointing Macquarie Research with an interim dividend 12 per cent below its estimates.
Moody’s Investors Service analyst David Xu said the results were “solid” but earnings were down from very strong levels, driven by the considerable decline of benchmark iron ore prices from peak levels over the past few months.
There was also a widening of discounts for lower grade iron ore, which Fortescue produced, he said.
“We think product discounts will likely remain wide for at least the next few months,” Mr Xu said.
“Higher costs also affected earnings. But Fortescue’s unit costs remain low for the sector, providing a good buffer and allxjmtzywowing the company to generate good earnings and cash flow even at lower realised prices.”
Rio Tinto eased 0.16 per cent to $118.56 and BHP retreated 1.76 per cent to $47.33.
Treasury Wine Estates unstoppered a favourable half-yearly report, sending its share barrelling 11.67 higher to $11.77.
“Impacts of tariffs from the Chinese government weren’t enough to shake investors, whose wine-goggles focused on a 16 per cent increase in net sales revenue per case and an earnings margin increase of 0.8 per cent,” Mr Tchourilov said.
“This is mostly thanks to a renewed focus on premium branded wine.
“While revenues are down to the tune of 10 per cent, this means they’re making better margins on the quantity that is being sold.
“The Penfolds brand was hit exceptionally hard by tariffs, and by today’s performance, it looks like shareholders haven’t lost their bottle in the stock and are backing the company’s transition away from Chinese markets.
“The 15 cent dividend announced today is a vote of confidence from Treasury’s management – let’s hope it isn’t just liquid courage.”
Mr Tchourilov said sectors in the red were few and far between, with the bulk of laggards coming from poor half-yearly results.
“Netwealth’s rising costs pushed it 9.7 per cent lower to $13.40 and a dip in earnings drove embattled payments provider EML down 3.9 per cent to $2.90,” he said.
Lark Distilling tumbled 20.88 per cent to $3.60 after announcing chief executive and managing director Geoff Bainbridge had abruptly quit “to enable him to manage a personal matter” that was brought to the board’s attention on Tuesday afternoon.
That turned out to be a sexually explicit video of the Grill’d co-founder appearing to smoke the illegal drug ice using a glass pipe.
The Australian newspaper reports that his lawyers said the video had been filmed in 2015 and used by overseas-based criminals in an extortion attempt.
ANZ gained 1.08 per cent to $28.10, Commonwealth Bank gave up 0.93 per cent to $98.57, National Australia Bank added 0.72 per cent to $30.64 and Westpac lifted 0.95 per cent to $23.29.
The Aussie dollar was fetching 71.6 US cents, 52.83 British pence and 63.05 Euro cents in afternoon trade.
