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Australian shares rose for a second day as Asian markets shrugged off weak Chinese trade data and attempts by Chinese health authorities to hose down talk of relaxing Covid restrictions.
The S&P/ASX 200 rallied 41 points or 0.6 per cent.
Gold miners, bulk metal producers and other resource stocks shone after sharp rallies in commodity prices on Friday. Westpac and ANZ were among the day’s biggest drags.
What moved the market
Hopes of China reopening have waxed and waned over the last week as Chinese authorities countered social media speculation the nation is preparing to scrap zero-Covid. Attempts by health authorities over the weekend to dampen reopening rum ours appeared to have little effect.
Hong Kong’s Hang Seng index followed up its best week in 11 years with a gain of 3.42 per cent this afternoon. The Shanghai Composite, which rallied 5.3 per cent last week, put on 0.46 per cent.
Soft Chinese trade data today may have stoked hopes of government stimulus measures. China’s exports contracted an unexpected 0.3 per cent last month from a year earlier, a sign global demand may be weakening. Imports shrank 0.7 per cent.
Resource stocks did the heavy lifting on the ASX following spectacular gains in commodity prices on Friday as reopening fever reached a new pitch. Copper, the “metal with the degree in economics”, jumped 7.1 per cent. Iron ore gained 4.9 per cent, tin 6.1 per cent, zinc 5.7 per cent, nickel 4.5 per cent and Brent crude 4.1 per cent.
US equity futures initially slumped this morning after Chinese health officials held a press conference to deny any change to the nation’s strict zero-Covid policy. China will stick to its “dynamic clearing” approach, officials from the National Health Commission told reporters on Saturday.
Covid cases across the country hit a six-month high on the weekend. Apple announced a temporary reduction in iPhone 14 production because of restrictions at its assembly plant in Zhengzhou.
S&P 500 futures fell as much as 0.8 per cent before paring their fall to five points or 0.13 per cent ahead of a week that includes US midterm elections and an inflation report.
Winners’ circle
Gold miners outperformed as the yellow metal held most of Friday’s strong gains. The yellow metal jumped 2.8 per cent on Friday. The metal gave back less than 0.1 per cent or 40 US cents this afternoon, easing to US$1,676.20 an ounce.
Capricorn Metals jumped 10 per cent after upgrading the mineral resource at its Mount Gibson project north-east of Perth. Evolution Mining gained 6.97 per cent, West African Resources 6.93 per cent and Gold Road Resources 6.84 per cent. Industry heavyweight Newcrest rose 4.2 per cent.
Other strong performers included Domino’s Pizza +6.2 per cent and Lifestyle Communities +3.82 per cent.
A 4.9 per cent jump in Chinese iron ore prices on Friday lifted the bulk metal majors. BHP rallied 4.98 per cent, Rio Tinto 3.75 per cent and Fortescue Metals 4.85 per cent.
Medibank nudged up 0.35 per cent after declaring it will not pay a ransom to cybercriminals behind the theft of customer data. The health insurer said it had been advised paying a ransom could do more damage than good.
“We believe there is only a limited chance paying a ransom would ensure the return of our customers’ data and prevent it from being published. In fact, paying could have the opposite effect and encourage the criminal to directly extort our customers, and there is a strong chance that paying puts more people in harm’s way by making Australia a bigger target,” CEO David Koczkar said.
Fintech Novatti jumped 43.24 per cent after securing a banking licence from the Australian regulator. The firm will launch the International Bank of Australia (IBOA) after its banking subsidiary obtained a Restricted Authorised Deposit-taking Institution licence from APRA. The bank will partner with fintechs looking for “an innovative and nimble banking partner”, IBOA chief executive Guy Carvalho said.
Arafura popped 13.11 per cent after signing an offtake agreement to supply rare earths to South Korean car-makers Hyundai and Kia. Supply is expected to commence in 2025.
Doghouse
Westpac retreated 3.94 per cent following a full-year result marred by write-downs and a contraction in margins. Cash earnings declined 1 per cent to $5.276 billion. Net interest margin dropped 17 basis points, despite a rebound in the second half.
The bank increased net profit by 4 per cent to $5.64 billion. Shareholders will receive a fully-franked final dividend of 64 cents per share.
ANZ declined 4.59 per cent as its shares traded without the right to its next dividend.
Coal miner Coronado swooned 7.05 per cent after merger talks with US firm Peabody Energy ended without a deal. Coronado said the termination of discussions would not affect its fourth-quarter outlook.
Suncorp eased 0.43 per cent on news severe weather events across Australia and New Zealand between July and October were expected to generate claims of at least $350-$410 million. The insurer said it had a comprehensive reinsurance program in place.
The launch of a second class action helped drag The Star Entertainment Group down 2.01 per cent. The new claim alleges the casino group made misleading representations about its anti-money laundering systems and compliance. The Star said it intends to defend the proceedings.
Burns treatment specialist Polynovo dipped 0.49 per cent after announcing its launch in India.
Other markets
Asian markets outside China were also positive. The Asia Dow advanced 1.68 per cent. Japan’s Nikkei put on 1.28 per cent.
Oil unwound some of Friday’s 4.1 per cent rally. Brent crude fell US$1.03 or 1 per cent to US$97.54 a barrel.
The dollar gave back some of its biggest single-day advance in 11 years. The Aussie reversed 0.13 per cent to 64.3 US cents.
