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ASX defies inflation worries, Evolution soars 10%

Daily Market Update

ASX delivers marginal gain, oil price pain continues, Evolution spikes
 
The S&P/ASX200 (ASX: XJO) managed to eke out a positive day, gaining 0.1 per cent or just 9 points as selling pressure from the banks offset solid gains in the rest of the market.
 
The financial sector fell 0.6 per cent with the Commonwealth Bank (ASX: CBA) giving back another 1.6 per cent.
 
The energy sector was the biggest detractor falling 1.5 per cent as the oil price moved below US$80 per barrel once again, sending Santos (ASX: STO) down more than 2 per cent.
 
The highlight of the day was gold miner Evolution Mining (ASX: EVN) which gained close to 10 per cent after announcing the purchase of the $1 billion Ernest Henry silver and copper mine in Queensland.
 
The acquisition is the latest in a flurry of corporate activity as the sectors stronger players seek to leverage their position.
 
It was a similar story for Treasury Wine (ASX: TWE) which finished 2.6 per cent higher after announcing they were seeking to acquire the highly rated Frank Family vineyard in the Napa Valley for $434 million.
 
The offer continues the trend of growing their exposure to the high end, strong margin sectors of the market after a number of distribution and surplus wine issues.
 
Sonic’s testing boom, Nufarm jumps, Aristocrat takeover proceeding
 
Sonic Healthcare (ASX: SHL) rallied 3 per cent, boosting the healthcare sector which gained over 1 per cent, after the company reported 16 per cent growth in earnings to $991 million for the first four months of the year.
 
Revenue growth has been closer to 5 per cent with the company seeing a huge tailwind from the 36 million COVID-19 tests they have undertaken during the pandemic.
 
Despite the strength they refused to offer guidance given the difficulty in predicting how long the testing boom will last.
 
Poker machine operator Aristocrat Leisure (ASX: ALL) lost 3.6 per cent after the company confirmed they would be pursuing the purchase of Playtech for $3.8 billion but that it may take well into 2022 before the deal is settled.
 
The news came after the company reported a 14.4 per cent jump in gaming revenue to $4.74 billion, with the reopening of casinos slowing growth in the online business.
 
Nufarm (ASX: NUF) reversed the previous day’s losses, gaining 5.2 per cent as investors continued to digest the chemical and fertiliser company’s result, in which management deliver a near 200 per cent turnaround from a $73 million loss to a $61 million profit.
 
The company remains concerned about higher input costs and margin pressure, as many in highly competitive, commoditised spaces are.
 
US markets rally, NVIDIA’s massive growth, Macy’s recovery, employment falls
 
Overseas markets were in positive territory despite initial claims for unemployment benefits remaining around the same level over the week.
 
Economists are keenly watching the trends in employment to understand whether the US labour shortage will worsen.
 
The Dow Jones continues to fall on the back of weaker energy prices, down 0.2 per cent, with both the S&P500 and Nasdaq outperforming, up 0.3 and 0.5 per cent each.
 
The strength was driven almost solely by the semiconductor manufacturer, NVIDIA (NYSE: NVDA) with the US$800 billion company representing close to 3 per cent of the index.
 
The company gained over 8 per cent after announcing revenue jumped 50 per cent to a record US$7.1 billion the quarter, with data centres and gaming sales up 55 and 42 per cent respectively.
 
Incredible market power and manufacturing strength is behind the strong performance with management highlighting expanding capacity to deal with current supply shortages.
 
Shares in department store Macy’s (NYSE: M) gained over 20 per cent as the company appears to be turning around its fortunes.
 
Profit reversed from a loss of US$91 million to a positive US$237 million with comparable stores sales surging over 30 per cent as doors reopened.


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