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Some of the worst-performing corners of the market enjoyed a day in the sun after a relief rally on Wall Street inspired the ASX’s first advance this week.

Gold miners, tech companies and small and micro caps outperformed as the S&P/ASX 200 rallied 60 points or 0.82 per cent.

The advance broke a three-session losing run in the run-up to and aftermath of Tuesday’s rate rise.

What moved the market

A sharp rally in gold and a retreat in long-term borrowing costs encouraged investors to explore out-of-favour sections of the market.  

The gold sub-sector bounced 3 per cent off a two-month low as a slump in the greenback pushed investors towards traditional currency hedges. The US dollar plunged after the Federal Open Market Committee (FOMC) raised its benchmark interest rate by 50 basis points and ruled out bumper 75-point hikes.

The news trigged sharp moves on financial markets. Stocks soared, the dollar collapsed and bond yields backed off multi-year highs. The S&P 500 climbed 2.99 per cent, its best return since 2020. The Nasdaq Composite gained 3.19 per cent.

Gold soared US$31.50 or 1.7 per cent this afternoon to US$1,900.30 an ounce. On the ASX, Regis Resources put on 6.39 per cent, De Grey Mining 5.33 per cent, Silver Lake Resources 5.3 per cent and Newcrest 2.67 per cent.

City Index senior market analyst Matt Simpson said conditions were ripe for a “swing low” in gold – a reversal pattern offering an attractive entry for short-term traders.

“Over the past 48-hours conditions have turned favourably for gold traders. Risk-off flows stemming from the EU’s decision to ban Russian oil imports helped support prices ahead of yesterday’s FOMC meeting,” he said.

“And the US dollar was arguably overstretched at it multi-year highs along with expectations for 75bps from the Fed, which Jerome Powell has since quashed. Given inflation remains rampant and the Fed aren’t as aggressive as some pre-emptive bulls had hoped, some will see gold as an inflation hedge once again.”

Other unloved sections of the market also attracted a bid at two-month lows. The tech sector climbed 2.54 per cent. The S&P/ASX Emerging Companies Index bounced 1.75 per cent. The Small Ords put on 2.17 per cent.

The rallies came as a decline in bond yields eased the cost of borrowing for growth companies. The yield on ten-year Australian government bonds declined 17 basis points this afternoon to 3.38 per cent.

Winners’ circle

Growth stocks rallied with the retreat in long-term borrowing costs. Novonix advanced 7.07 per cent, Imugene 5.88 per cent and Telix Pharmaceuticals 5.17 per cent. Block added 1.68 per cent.

Lithium miners pared recent weakness. Liontown Resources put on 7.72 per cent, Pilbara Minerals 7.6 per cent and Allkem 4.79 per cent. Other miners to advance included Paladin Energy +6.45 per cent and Chalice +5.43 per cent.

At the heavyweight end, Fortescue Metals added 3.53 per cent, Woodside Petroleum 2.18 per cent and Santos 1.36 per cent.

A 19 per cent increase in gross written premiums across the first half lifted QBE 5.49 per cent. The insurer told today’s AGM it would review its full-year outlook at the half-year result.

Investment manager Challenger climbed 3.09 per cent to a two-year high after an upbeat presentation at the Macquarie Australia Conference. Managing Director and CEO Nick Hamilton said the industry was experiencing tailwinds and the firm was well positioned for future growth.

AMP rallied 1.68 per cent despite news clients continued to pull funds last quarter. The financial manager’s wealth management division saw net cash outflows of $1.3 billion. Assets under management declined to $136.5 billion from $142.3 billion the previous quarter.

Vicinity Centres gained 4.09 per cent after reaffirming full-year guidance.

At the speculative end, Red Sky Energy jumped 60 per cent after an independent expert issued an upbeat assessment of oil in place at the explorer’s Killanoola project.

Doghouse

NAB dropped 0.59 per cent as increased expenses and margin pressure took some of the shine off strong half-year growth and a dividend increase. Expenses rose 2.6 per cent. Net interest margin contracted 11 basis points to 1.63 per cent.

Cash earnings improved 4.1 per cent to $3.48 billion from 1H21. Shareholders will receive an interim dividend of 73 cents per share, up from 60 cents last year.

Qantas eased 0.35 per cent after striking a deal to buy Alliance Aviation for $614 million. Qantas already owns 20 per cent of the charter jet firm and will pay a 32 per cent premium to mop up the rest of the shares. Alliance Aviation shares jumped 21.08 per cent.

Asset manager Janus Henderson plunged 13.04 per cent to a 13-month low after missing analyst estimates on first-quarter earnings and revenue. Assets under management declined by 8 per cent, excluding the sale of a subsidiary.  

Beauty and wellness business BWX slumped 20.64 per cent after full-year guidance fell short of market expectations. The company expects earnings to contract in the second half, dashing expectations for strong growth. Management blamed increased costs, supply-chain issues and acquisitions not yet meeting expectations.

Private hospital operator Ramsay Health Care fell 0.65 per cent after falling out with health insurer Bupa. Ramsay said it had issued notice to terminate an agreement between the parties after they were unable to reach terms on a new contract.

Other markets

China’s Shanghai Composite resumed trade after a three-day holiday with a rise of 0.9 per cent. Hong Kong’s Hang Seng put on 0.47 per cent. The Asia Dow gained 0.74 per cent. Trade in Japan was suspended for a public holiday.

US futures marked time in the wake of last night’s burst. S&P 500 futures were recently up two points or 0.05 per cent.

Oil added to last night’s near 5 per cent advance. Brent crude climbed 91 US cents or 0.8 per cent to US$111.05 a barrel.

The Australian dollar was the best-performing major currency over the last 24 hours, flying up more than 2 per cent. The Aussie was lately trading at 72.4 US cents, up from near 71 cents overnight.

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