The S&P/ASX 200 (ASX: XJO) powered to a record close despite a bumpy start to the week, with the materials sector sending the market 1.1% higher.
Materials jumped 2.2% and energy 2.5% with healthcare the only detractor as the cyclical story returned.
Lithium boom 2.0
The highlight was lithium miners Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE), which both finished around 10% higher after Orocobre reported strong results.
The company confirmed 3,300 tonnes of production, a 31% increase, which converted to a 59% increase in sales volumes, ultimately revenue was US$21.6 million.
BHP strikes a deal
Sticking with mining BHP Group Ltd (ASX: BHP) jumped 3.1% after the group signed a deal to supply nickel to Tesla (NASDAQ: TSLA) for battery production.
Demand for the commodity is expected to grow by 500% over the next decade amid rising demand for electric vehicles.
Any illusion that Australia’s economy is diversifying were disproven with the latest trade surplus of $13.3 billion in June being driven by $17.5 billion of the $41.2 billion in total exports coming from iron ore. Coal also remains a key export, hitting $555 million.
Zip underperforms
Zip Co Ltd (ASX: Z1P) fell 7.8% on Thursday, the worst performer on the ASX after quarterly data failed to meet expectations.
The company delivered weaker than expected transaction volumes of $1.8 billion, an increase of 116% on 2020 levels with customers climbing 87% to 7.3 million.
Revenue beat expectations, up 104% to $129.9 million but an unexpected increase in bad debts has hedge funds setting short positions.
Zip’s revenue in the US jumped 280% and is now more than half of total revenue. An interesting reaction to a fairly strong result, but not unexpected given the prevailing valuation.
Santos’ record sales
Santos Ltd (ASX: STO) delivered record quarterly sales of US$1.1 billion and first-half sales exceeding US$2 billion as higher volumes combined with an oil price recovery; shares added 2.6%.
The company is now producing US$572 million in free cash flow with a breakeven price of US$25 per barrel of oil, yet the company will remain challenged by a renewed focus on cleaner energy.
ASX 200 today
According to the latest SPI futures, the ASX 200 is set to take a backwards step when the market opens on Friday. This comes despite a positive lead from US markets overnight.