Cyclical stocks helped the share market inch higher for the first time this week as optimism about the improving economic outlook overcame concerns about rising borrowing costs.
The S&P/ASX 200 shrugged off a weak morning to advance 7.5 points or 0.1 per cent. Rate-sensitive banks stocks led the reversal, rising to a ten-month closing high. Energy stocks climbed to their strongest level since March as oil rose for a seventh day.
What moved the market
A tight, range-bound session saw the market struggle for most of the session before kicking decisively higher in late afternoon. Improving US futures encouraged local investors to dip their toes. S&P 500 futures climbed nine points or 0.2 per cent.
The market struggled initially following a lacklustre night in the US as traders kept an eye on surging borrowing costs and fretted about impeachment proceedings against President Donald Trump. The S&P 500 finished barely changed, up 0.04 per cent.
Shares turned positive as traders bought stocks best placed to benefit from an economic recovery once vaccines become widely available. The energy sector jumped 4.3 per cent, materials 0.7 per cent and financials 0.2 per cent.
"The amount of pent-up demand is slowly being unwound and over the next year it is probably going to result in the strongest growth in 20 years and markets are pricing that in,” Peter Essele, head of portfolio management at Commonwealth Financial Network, told Reuters.
Markets ignored developments in Washington, where Vice President Mike Pence formally rejected calls to remove Trump. In other developments, several House Republicans indicated they will support impeachment proceedings against Trump. The House was set to vote tonight to impeach on "incitement to insurrection".
Energy stocks surged as oil advanced for a seventh session. Brent crude rallied 79 cents or 1.4 per cent this afternoon to $US57.37 a barrel. Oil Search climbed 6.2 per cent, Woodside Petroleum 5.4 per cent, Beach Energy 4.2 per cent and Santos 3.9 per cent.
This week's ten-month peak in US bond yields has weighed on bond proxies, but sharpened interest in lenders that benefit from higher borrowing costs. Westpac and ANZ were the best of the big four today, both rising 0.5 per cent. CBA and NAB added 0.1 per cent.
Iron ore majors BHP and Fortescue Metals rose for the first time in four sessions. BHP put on 0.5 per cent and Fortescue 0.2 per cent. Rio Tinto fell almost 0.6 per cent.
Gold miner Newcrest advanced 3.2 per cent on news the board approved a $146 million investment in the Havieron joint venture in WA following the receipt of regulatory approvals.
Retail stocks rallied after Premier Investments announced a 75-85 per cent surge in first-half profits. Shares in the group, which owns the Just Jeans, Smiggle and Jay Jays brands, jumped 12.7 per cent. JB Hi-Fi gained 2.3 per cent, Kogan 3.5 per cent and Harvey Norman 4.2 per cent.
The speculative end of the market outpaced the broader market. The S&P/ASX Emerging Companies Index climbed 1.4 per cent. The Small Ords put on 0.6 per cent.
Tech stocks on both sides of the Pacific have come under pressure as increased borrowing costs present a headwind to growth. Here, Altium slid 6.2 per cent, Nextdc 4 per cent and Afterpay 1.4 per cent.
Bond proxies - companies offering predictable, attractive dividend payments - also struggled. Coles sank 2.4 per cent, Transurban 1.7 per cent, Woolworths 1.5 per cent and Goodman Group 1.6 per cent. CSL declined 0.7 per cent.
EFTPOS payments provider Tyro Payments eased 2.1 per cent after announcing it had identified a problem causing connectivity issues for some merchants. The company said the issue affected less than a third of users and it was working to minimise disruption.
A broadly flat session on Asian markets saw China's Shanghai Composite fade 0.1 per cent, Hong Kong's Hang Seng ease less than 0.1 per cent and Japan's export-driven Nikkei rise 1.1 per cent.
Gold rebounded as the US dollar declined. The yellow metal climbed $15.40 or 0.8 per cent to $US1,859.60 an ounce.
The dollar slid 0.16 per cent to 77.62 US cents.
Hot today and not today
Hot today: Shares in Frontier Resources (ASX:FNT) briefly doubled on news of high-grade rock samples along the eastern boundary of its Tolukuma gold lease in PNG. Sampling to define drilling targets discovered a high-grade segment along the Kimono Central Vein. Additional trench sampling will start later this month. The share price bolted from 1.4 cents to 3.5 cents before trimming its advance to 64.3 per cent at 2.3 cents.
Not today: Some of the heat seeped out of the Red Mountain Mining (ASX:RMX) share price following disappointing drill results. Shares in the metals explorer mysteriously doubled last week from 1.1 cents to 2.2 cents ahead of the release of results from the maiden drilling program at the Mt Maitland Fold Project. Alas, today's release focussed on plans for Phase II drilling after the first holes delivered only modest results. The share price sank 22.2 per cent to 1.4 cents.