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The ASX 200 booked a third week of gains with its first close above 7000 in seven weeks.

The Australian benchmark overcame mixed leads from Wall Street to advance 40.7 points or 0.58 per cent to 7015.6.

The rally sealed a weekly gain of 70 points or 1 per cent. The index has bounced 9.5 per cent since its June low.  

Miners led today’s advance with support from supermarkets, healthcare providers and property stocks. Energy and tech were the biggest drags.

What moved the market

Gold and iron ore miners did the heavy lifting as the ASX 200 passed an important milestone in its recovery from the June global market plunge. The 7000 level acted as technical resistance for much of the week before falling today. The barrier gave way at the third attempt after failed assaults on Tuesday and again yesterday.

Commodity markets provided a stronger lead today than Wall Street. Gold rallied to its highest in a month. Iron ore bounced 2 per cent this afternoon in China. Copper gained 1.6 per cent in US trade.

Those moves helped the market look past a subdued night on Wall Street where the major indices finished mixed. The S&P 500 and Dow eased 0.08 and 0.26 per cent, respectively. Strength in Big Tech lifted the Nasdaq Composite 0.41 per cent.

“Major Wall Street indices ended Thursday’s lacklustre trading on a flat note ahead of monthly jobs data tonight,” Kunal Sawhney, chief executive of research group Kalkine, said.

“Investors are looking for signals of tightening in the labour market, which might prompt the Fed to ease up on its future rate hikes. Through aggressive rate hikes, the Fed wants to eliminate the excess demand in the economy and temper inflation without negatively impacting the labour market. So, Fed will keenly eye the labour market data to assess the impact of rate hikes.”

The Australian market shrugged off news the Reserve Bank expects inflation to remain well above target until late 2024. The bank today forecast the consumer price index will hit 7.8 per cent by the end of the year before easing to 4.3 per cent by the end of 2023. The bank does not expect the CPI to fall to the upper edge of its target range until late 2024.

“It is clear from the latest quarterly report that the Reserve Bank faces a struggle to get inflation back into the 2-3 per cent target band,” CommSec’s chief economist Craig James said.

“Businesses continue to pass on cost increases in the form of higher selling prices. And more firms are tipping higher wages, a development that could place further upward pressure on prices.”

Unemployment is expected to hit a low of 3.4 per cent next year before rising to 4 per cent in 2024. Wage growth is predicted to rise towards 3.9 per cent in the same timeframe.

Westpac believes the economy will slow rapidly next year as consumers tighten their spending in the face of higher prices and interest rates.

“We have marked down our output profile for 2023 and 2024, with growth now forecast to slow to 1% in 2023, downgraded from 2% previously, then recover to 2% in 2024, rounded down from 2.5%. Consumers and housing will lead the slowdown in the face of high inflation and high interest rates,” the bank’s economics team wrote.  

Winners’ circle

Gold’s strongest close in a month kept local miners on the upswing. The S&P/ASX Gold index climbed nearly 2.5 per cent.

Ramelius Resources was the pick of the local miners, rising 6.7 per cent. Silver Lake Resources put on 6.57 per cent, Regis Resources 4.49 per cent and Sandfire 4.11 per cent. Industry heavyweight Newcrest gained 0.74 per cent.

Core Lithium firmed 6.2 per cent after announcing former Rio Tinto executive Gareth Manderson as its new CEO. Manderson has 28 years of experience in the mining sector, including several roles at Rio.

A partnership with German automotive giant BMW AG boosted European Lithium 7.32 per cent. The firms signed a non-binding memorandum of understanding for the Austria-focussed ASX-listed miner to supply BMW with battery-grade lithium hydroxide.  

Besides miners, growth stocks provided the session’s best returns. Novonix surged 13.65 per cent, Life360 5.76 per cent and PointsBet 5.35 per cent.

The bulk-metal majors rallied as Chinese iron ore prices rebounded. Rio Tinto gained 2.56 per cent. Fortescue Metals firmed 2.72 per cent and BHP 1.68 per cent.

Other heavyweight gains included Wesfarmers +1.49 per cent, Woolworths +1.91 per cent and Telstra +1 per cent.

GQG Partners edged up 1.32 per cent after reporting a US$2.2 billion increase in funds under management last month as equity markets recovered. Total FUM increased to US$88.9 billion from US$86.7 billion in June.

Doghouse

Afterpay’s parent company Block was among the biggest drags on the index after reporting payments volumes short of Wall Street estimates. Shares in Block’s Australian listing sank 6.17 per cent, broadly in line with US losses in extended trade this morning.

Revenue and profit were dented by weak consumer demand and volatility in cryptocurrencies. The fintech took a US$36 million impairment on Bitcoin.

The energy sector has shown considerable resilience to deteriorating prices, but sank 1.4 per cent today after US crude dropped below US$90 a barrel.

“Crude oil fell sharply as recessionary fears drove concerns of weaker demand. Brent crude has now given up all the gains triggered by Russia’s invasion of Ukraine in February,” ANZ’s senior commodity strategist Daniel Hynes said.

Beach Energy shed 2.81 per cent, Woodside 1.3 per cent and Santos 0.71 per cent.

Coal miners felt the heat from a 2.2 per cent decline in thermal coal prices. Whitehaven gave up 3.54 per cent. New Hope lost 5.37 per cent.

Other markets

Japan’s Nikkei index was the pick of the major Asian markets, rising 0.86 per cent. The Asia Dow gained 0.5 per cent. China’s Shanghai Composite added 0.35 per cent. Hong Kong’s Hang Seng put on 0.1 per cent.

US futures gained momentum late morning. S&P 500 futures were recently ahead eight points or 0.2 per cent.

Oil overcame early weakness, rebounding off a six-month low. Brent crude rallied 54 US cents or 0.57 per cent to US$94.66 a barrel.

Gold tacked on another US$1.30 or 0.07 per cent at US$1,808.20 an ounce.

The dollar inched up 0.1 per cent to 69.67 US cents.

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