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The Australian share market has recovered after two days of losses with Energy and Materials stocks leading the charge.

The S&P/ASX 200 Index has clawed back 47 points, or 0.64 per cent, to 7437.10, making up for most of yesterday’s losses.

What drove the market

In China, headline consumer inflation eased from 2.3%/yr to 1.5%/yr in December.

The easing was mainly driven by food and fuel prices, according to Commonwealth Bank Senior Asia Economist Kevin Xie.

“Core inflation, excluding food and energy, remains low at just 1.2%/yr (chart 1). The benign inflation picture in China (and Japan)contrasts sharply with rising inflation in the US and other major economies,” Mr Xie said.

“Consequently, monetary policy will diverge between china and the US.”

Federal Reserve Chair Jerome Powell stated that the central bank was committed to keeping rising inflation from becoming “entrenched,” and that, rather than dampening job creation, a shift to higher policy interest rates and a runoff of its asset holdings was required to maintain the current economic upswing.

Joseph Capurso, Head of International Economics at Commonwealth Bank, said it might be too late for that.

“We now expect the FOMC to start increasing the Funds rate in March(with a risk of May) compared to ourprevious forecast of May(with a risk of March),” he said.

“Our new forecasts imply the FOMC will stop loosening monetary policy (ending monthly asset purchases)and start tightening monetary policy (increasing the Funds rate) at the around the same time in mid-March.”

According to new seasonally adjusted data from the Australian Bureau of Statistics (ABS), there were 396,000 job vacancies in November 2021, 169,000 more than before the pandemic began.

“These numbers continue to illustrate the significant demand for employees from enterprises emerging from lockouts, as well as continued labour shortages, notably in lower-paying industries,” said Bjorn Jarvis, the ABS’s head of Labour Statistics.

According to the ABS, the value of engineering construction work done declined by 2.3 per cent in the September quarter of 2021 in seasonally adjusted figures.

Winners’ circle

PacGold led the gains today, surging 57.1 per cent after revealing a “substantial extension” of a newly found high-grade zone at its Alice River gold project in North Queensland.

Immuron mirrored the gains observed in the Health Care sector, with the company’s shares increasing 29 per cent on the announcement that it had been awarded AU $4.8 (USD $3.43) million financing for Travelan by the US Department of Defense.

Afterpay shares rose 4.65 per cent after it announced its acquisition by payments firm Block received a key approval from the Bank of Spain.

The Energy sector led gains on the market today, with Energy stocks rising 2.92 per cent. Energy giants Santos and Ampol saw gains. 

In the Finance world, the big four banks saw marginal gains – led by Westpac, up 0.14 per cent. 

Rounding off some of the other major gainers on the market today, Tombador Iron rose 25.7 per cent, Shree Minerals 25 per cent, Blackstone Minerals 22.4 per cent and Novatti group 22 per cent.

Doghouse

Despite gains in the overall Materials sector, Ark Mines has suffered a 14.9 per cent drop in its stock.

Consumer Staples stocks continued yesterday’s losses, with the sector falling 0.75 per cent. WoolworthsColesEndeavour and Metcash were all down. TTA Holdings was down 12 per cent.

The Industrials sector joined the Consumer Staples stocks in the red, falling 0.25 per cent. Synertec Corporation stocks fell 10.11 per cent.

The big materials players saw mixed results, with BHP and RIO seeing gains, while FMG shares fell after Citi Group analysts reduced their rating for the stock from a hold to a sell.

Gold stocks have also enjoyed gains, with Newcrest Mining and Northern Star on the up.

Rounding off some of the major drops on the market today, HSC Technology fell 13.3 per cent, Polymetals 12.9 per cent, Patratherm 12.2 per cent and Alma Metals 12.1 per cent.

Other markets

Asian markets joined the ASX in the green today. The Asia Dow increased 0.77 per cent, Hong Kong’s Hang Seng 2.12 per cent but China’s Shanghai Composite 0.35 per cent and Japan’s Nikkei was up 1.82 per cent in late trade.

US futures moved slightly up. S&P 500 futures were recently up 3.5 points, or 0.07 per cent.

Oil is down, with Brent Crude falling to US$83.63 a barrel.

Gold was up slightly. Gold prices grew 0.001 per cent to US$1,818.70 an ounce.

The dollar was up 0.28 per cent to 71.85 US cents.

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