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The share market recouped the last of its omicron-inspired losses during its strongest session in two months.
The S&P/ASX 200 climbed 91.5 points or 1.25 per cent to 7405, two points off where it sat when news of the new Covid variant first broke. The index briefly traded as high as 7433, a three-week peak.
Today’s advance was the index’s fourth in a row, its longest winning run in four months. The rise was the strongest since a 93-point surge on October 4.
Mining and technology stocks spearheaded gains. All 11 sectors finished higher.
What moved the market
Wall Street gave notice overnight that the omicron market scare was effectively over. The Nasdaq Composite jumped 3.03 per cent, its best return since March. The S&P 500 put on 2.07 per cent. US crude traded above US$70 a barrel for the first time in two weeks.
“Although scientists are still evaluating the severity of the new virus strain and how well current vaccines can work against it, Omicron fears seem to be abating in the stock market,” Kalkine Group CEO Kunal Sawhney said.”‘Buy-the-dip’ investors are flooding back into the market, seeking bargains out of the wreckage of the last few weeks.”
US equity futures continued to improve this afternoon after lawmakers took an important step towards averting a government debt default. The House of Representatives passed a bill to allow the Senate to raise the government’s borrowing limit by a majority vote. The measure is expected to pass in the Senate, allowing both houses to vote on a new limit before a December 15 deadline.
S&P 500 futures climbed 15.5 points or 0.34 per cent. Dow futures rallied 80 points or 0.22 per cent. The Dow has put on more than 1,100 points in the last two sessions.
Also helping sentiment was news this week that Australia’s biggest trading partner loosened monetary policy to give the economy a nudge. The People’s Bank of China reduced the amount of cash lenders have to hold in reserve.
“China’s move is expected to unleash over 1 trillion yuan into the financial system, easing liquidity constraints and helping the world’s second-largest economy escape slowdown,” Kalkine’s Sawhney said.
“Although Australia and China have been at loggerheads over recent years due to trade sanctions on specific commodities, the two economies still share strong trade links. As any risk of a slowdown in China is often painted as a key uncertainty for Australia’s economic outlook, China’s recent move to stabilise the economy is certainly a piece of welcome news for Australia.”
Winners’ circle
The improvement in risk appetite boosted some of the ASX worst performers over the last week. Biotech Mesoblast soared 10 per cent, Z1P Co 10.9 per cent, Kogan 6.17 per cent and Redbubble 5.38 per cent.
The tech sector, which bore the worst of last week’s sell-off, added to yesterday’s rebound gains. Afterpay put on 4.24 per cent, Tyro Payments 3.55 per cent and WiseTech 3.38 per cent.
Iron ore producers rallied following an 8.1 per cent jump in ore prices after trade data showed a surge in ore imports into China last month. Fortescue Metals climbed 3.27 per cent, Rio Tinto 2.18 per cent and BHP 1.85 per cent.
Mineral Resources tacked on 5.85 per cent, Champion Iron 5.79 per cent and Pilbara Minerals 5.51 per cent.
Oil Search and Santos rallied after clearing another hurdle on the path to creating a top 20 global oil and gas producer. Papua New Guinea’s Independent Consumer and Competition Commission waved through a merger proposal. The deal still has to pass the National Court of PNG at a hearing tomorrow.
Oil Search shares rallied 2.19 per cent. Santos gained 2.18 per cent.
Woodside Petroleum unveiled plans to invest US$5 billion in emerging energy sources as part of a global shift towards greener energy. The company aims to reduce its net emissions by 30 per cent by 2030 and reach zero by “2050 or sooner”. The share price lifted 2.1 per cent.
Nickel Mines rose 1.5 per cent after striking a deal to acquire a 70 per cent stake in an Indonesian nickel project. The miner will pay its partner, Shanghai Decent, US$571 million for an equity interest in the Oracle Nickel Project in central Sulawesi.
Shareholders in junior explorer Emmerson Resources briefly saw their investment triple in value following the release of “stunning” drilling results from the company’s Hermitage Project at Tennant Creek. The share price charged from 7.4 cents to 22.25 cents. It finished the day 129.7 per cent ahead at 17 cents.
Managing Director Rob Bills said the results reflected “very extensive, very high-grade copper mineralisation, with intervals of high-grade gold and cobalt”.
Telstra edged up 1.25 per cent after spending $616 million to buy the maximum possible low band spectrum permitted in the latest auction. Chief Financial Officer Vicki Brady said the spend was important for maintaining the telco’s mobile network, particularly in regional and rural Australia.
Doghouse
The index’s worst performers were Steadfast Group -4.01 per cent, Polynovo -2.71 per cent and Orora -2.31 per cent. Brambles was the only heavyweight to lose ground, falling 0.76 per cent.
Home-meal delivery service Marley Spoon, one of the big winners from the initial pandemic bonanza in “stay-at-home” stocks, fell 5.52 per cent to a 20-month low. Shares that peaked at $3.80 last year traded at 74 cents this session.
Other markets
Most Asian markets rose for a second day. The Asia Dow put on 0.51 per cent, China’s Shanghai Composite 0.86 per cent and Japan’s Nikkei 1.5 per cent. Hong Kong’s Hang Seng eased 0.12 per cent
Oil trimmed four days of gains. Brent crude eased 18 US cents or 0.24 per cent to US$75.26 a barrel.
Gold rose US$5.30 or 0.3 per cent to US$1,790 an ounce.
The dollar bounced 1 per cent overnight and was lately trading another 0.16 per cent higher at 71.34 US cents.
