It was another volatile day for the S&P/ASX 200 (ASX: XJO), with the market trading significantly higher before reversing gains to finish up just 0.1%.
The ASX 200 and individual sectors continue to diverge on a daily basis as the pressure of the 10-year Australian government bond yield impacts valuations very differently.
The financial and banking sector benefits from higher rates via the ability to extract a larger margin on their loans, with Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) up 1.4% and 1.5%, contributing to a 0.8% return for the sector.
Staples also outperformed as investors once again turn to the likes of Woolworths Group Ltd (ASX: WOW) to protect capital.
The ASX technology and discretionary sectors are the first to sell off whenever yields spike, with both down 0.8% on Monday.
ASX lithium miners pressured, GrainCorp jumps
Mining outperformed despite Australia’s top lithium miners selling off on commentary from one of the leading battery mineral miners. Pilbara Minerals Ltd (ASX: PLS), Novonix Ltd (ASX: NVX) and Mineral Resources Limited (ASX: MIN) were all down more than 3%.
GrainCorp Ltd (ASX: GNC) remains the highlight, up another 7%, as brokers upgrade earnings and dividend expectations on the back of the Russian disruption.
Virtus deal upgraded, Western Areas bid increased
There was no lack of corporate activity on Monday, with IVF and fertility business Virtus Health Ltd (ASX: VRT) deciding to back an improved $8.15 per share takeover offer from CapVest, whilst private equity group BGH remains in the wings.
Shares in Western Areas Ltd (ASX: WSA) jumped another 5.5% after bidder IGO Ltd (ASX: IGO) was forced to increase its takeover offer by 15% to $3.87 per share. The price now trades in line with what is perceived to be fair value.
Pfizer bids for ResApp, Adore Beauty tumbles to new low
Shares in microcap biotech company ResApp Health Ltd (ASX: RAP), which claims to be able to detect COVID-19 through recordings of a cough, jumped 22.2% after Pfizer (NYSE: PFE) announced a $100 million bid for the company, a 27% premium to the last traded price.
On the other side, Adore Beauty Group Ltd (ASX: ABY) shares fell to an all-time low on Monday as the e-commerce led beauty products business fell 8.7%. This takes the loss from the October 2020 $6.75 float price to around 73%.
Meanwhile, BlueScope Steel Limited (ASX: BSL) is utilising strong prices to bulk up, agreeing to a US$500 million deal to buy metal painter Coil Coatings in the US.
ASX 200 today
Looking ahead, the ASX 200 is expected to open lower this morning, following a negative lead from US stock markets overnight. All three benchmarks finished in the red, with the Nasdaq the biggest detractor, falling 2.2%. To find out more, check out my US stock market report.