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The share market wrapped up its strongest week since March with its fourth rise in five sessions as a recovery in resource stocks continued.

The S&P/ASX 200 climbed 30 points or 0.45 per cent. The market finished off its session high as Asian markets reacted to the shooting of former Japanese Prime Minister Shinzo Abe.

Commodity stocks led for a second day as crude oil, iron ore and metals rebounded. Defensive assets retreated as risk appetite improved following four days of gains on Wall Street.

What moved the market

The share market booked its second weekly advance in three weeks as recession fears temporarily subsided on global markets. Sharp declines in commodity prices through the first half of the week took some of the heat out of inflationary pressures, raising hopes interest rates may not have to rise as high as previous market pricing indicated.

For the week, the ASX 200 put on 138 points or 2.1 per cent. That tally was the best weekly return since mid-March when the index was still well above 7000. It closed today at 6678.

Overnight, the S&P 500 climbed 1.5 per cent to a fourth straight gain. This week’s run matched the US benchmark’s best spell of the year, back in March.

While Australian economic data continued to run hot this week, indicators in the US showed the early effects of recent rate hikes. Tonight’s June US employment report could throw fuel on the market recovery if it confirms recent signs the economy is slowing.

Data this week showed corporate layoffs increased last month at the fastest pace since January 2021. Claims for unemployment benefits rose last week to their highest since November.

“A deceleration in the speed of job growth will be taken positively by the market as the Fed may not aggressively raise rates to temper inflation. Weakening of the labour market will be the first sign that the policies of the Fed are working,” Kunal Sawhney, chief executive of research group Kalkine, said.

A slowdown in jobs growth would be unlikely to derail Federal Reserve plans to increase its benchmark rate by between 50 and 75 basis points this month, according to City Index senior market analyst Matt Simpson. But it could mark a turning point for investor confidence.

“When we do see unemployment begin to rise and headline employment growth lose momentum it will be hard for the Fed to ignore. And that could provide a reason for the Fed to at least pause their hiking cycle, because a crumbling jobs market is great for deflation. So I’d expect market fireworks if and when [employment data] begins to disappoint,” Simpson said.

Winners’ circle

A V-shaped week for resource stocks delivered further gains this afternoon as commodity prices responded to Chinese stimulus proposals. Bloomberg reported Beijing was considering allowing local governments to sell an additional US$220 billion in special bonds to fund infrastructure spending.

Iron ore on China’s Dalian Commodity Exchange inched up 0.2 per cent this afternoon. The advance built on yesterday’s 3.9 per cent rebound. Copper bounced 4.2 per cent overnight. Brent crude jumped 3.9 per cent.

Energy giants Santos and Woodside put on 2.32 and 1.72 per cent, respectively. Uranium miner Paladin Energy gained 5.08 per cent. Lynas Rare Earths strengthened 4.5 per cent.

The heavyweight bulk metal trio of BHP, Rio Tinto and Fortescue Metals added between 0.26 and 0.72 per cent.

Lithium miners outpaced the broader market as the metal continued to weather recent pressures on commodity prices. Morningstar predicted undersupply would keep prices strong until at least 2030.

Liontown Resources gained 7.37 per cent, Allkem 5.23 per cent and Pilbara Minerals 6.82 per cent.

Vulcan Energy jumped 7.14 per cent after striking a deal with Italy’s largest geothermal energy producer to develop Vulcan’s Italian project. EnelGreen Power will partner on a joint scoping study.

Beaten-down gold miner St Barbara bounced 9.64 per cent after meeting production guidance for the June quarter.

Mobile app-maker Life360 sealed its strongest close in more than two months after rising 14.33 per cent.

Doghouse

Investment managers saw funds under management (FUM) contract during last month’s market volatility. Magellan’s FUM shrank to $61.3 billion from $65 billion as the struggling manager saw net outflows of $5.2 billion.

Funds under management at GQG Partners shrank to US$31 billion from US$33.7 million in May. Magellan shares fell 3.02 per cent. GQG shed 4.1 per cent.

Bond proxies were out of favour as the yield on Australian bonds improved for a second day. Woolworths dipped 0.27 per cent. Coles lost 0.22 per cent. Telstra retreated 0.77 per cent and Goodman Group 1.15 per cent.

Packager Orora gave up 5.93 per cent, fast food franchisor Collins Foods 3.89 per cent and vitamins manufacturer Blackmores 1.86 per cent.

Other markets

Asian markets faltered after the attack on former Japan PM Abe. The Nikkei 225 index more than halved its advance to 0.5 per cent.

The Asia Dow cut its rise to 0.27 per cent. China’s Shanghai Composite rolled over to a loss of 0.15 per cent. Hong Kong’s Hang Seng also turned negative, easing 0.1 per cent.

US futures retreated ahead of tonight’s monthly employment update. S&P 500 futures fell 19 points or 0.5 per cent.

Oil gained strength in afternoon trade. Brent crude firmed 30 US cents or 0.3 per cent to US$104.95 a barrel.

Gold built on its first rise in eight sessions. The yellow metal firmed US$1 or 0.06 per cent to US$1,740.70 an ounce.

The dollar fell back towards two-year lows in afternoon trade. The Aussie was lately off 0.35 per cent at 68.24 US cents.

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