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Australian shares rose for a second day but closed below session highs as Asian markets retreated and falling iron ore prices undermined early strength in miners. 

The S&P/ASX 200 finished with a gain of 19 points or 0.25 per cent after being up as much as 30 points.

The bulk metal producers that provided much of the session’s early momentum faded as ore prices declined more than 3 per cent in China. Woodside Petroleum and other energy companies rallied with oil. Newcrest, Aristocrat Leisure and Telstra were the best of the rest of the heavyweights.

What moved the market

A promising early advance petered out as US equity futures pared gains. S&P 500 futures cut their advance to six points or 0.13 per cent by the Australian close.

An early rise of 0.3 per cent sharpened hopes the weekend will act as a circuit-breaker to the index’s longest losing run since February. The S&P 500 fell 0.77 per cent on Friday to a fifth straight loss.

US futures faded as Asian markets struggled. The Asia Dow slid 0.92 per cent and Hong Kong’s Hang Seng 2.26 per cent. Japan’s Nikkei was unchanged. China’s Shanghai Composite traded both sides of break-even and was lately up 0.1 per cent.

Australia’s big three ore producers trimmed or gave up early gains as a Chinese clampdown on steel production continued to depress demand. IG reported Chinese ore prices slid 3.21 per cent today to a new one-year low.

Rio Tinto fell 0.19 per cent after advancing 2.1 per cent in early trade. BHP trimmed its rise to 0.56 per cent. Fortescue Metals held on to a gain of 0.77 per cent.

“Prices remain under pressure, on concerns of further curbs on Chinese steel mills,” commodities strategist Daniel Hynes of Hynes Commodities said. “Investors are worried about steel demand from the property sector. China’s property tightening measures have brought about a rapid slowdown in construction activities. This is likely to weigh on demand for steel and iron ore in Q4 2021.”

The day’s real excitement happened in the uranium sub-sector after spot prices hit a seven-year high. Demand has been reignited by the push for cleaner, greener fuels and by seasonal factors as buyers for nuclear reactors re-enter the market with renewed budgets after the northern summer break.

Australian producers and explorers saw gains of more than 30 per cent. 92 Energy surged 46.6 per cent, Vimy Resources 38.24 per cent, A-Cap Energy 34.29 per cent and Peninsula Energy 31.82 per cent. Energy Metals gained 31.25 per cent, Delecta 30 per cent, Deep Yellow 28.8 per cent, Energy Resources 27.27 per cent and Alligator Energy 26.67 per cent.

Winners’ circle

Sydney Airport climbed 4.62 per cent after the board backed a revised $23.6 billion takeover offer from a consortium of superannuation funds. Shares that closed at $8 on Friday closed at $8.37 after the funds increased their offer a second time to $8.75 cash per share over the weekend. The board said that in the absence of a superior offer it would “unanimously recommend” shareholders vote in favour of the proposal.

Aristocrat Leisure continued to break new ground, rising 2.88 per cent. Shares in the poker machine manufacturer that traded below $15 during the pandemic sell-off neared $50 this session, rising as high as $49.02.

The banks traded mixed. CBA firmed 0.21 per cent and ANZ 0.11 per cent. Westpac eased 0.04 per cent. NAB dipped 0.95 per cent after Credit Suisse downgraded its rating on the bank’s shares to ‘Neutral’ from ‘Outperform’.

Nuix gained 3.36 per cent after announcing the acquisition of US language software specialist Topos Labs. Nuix said it will fund the US$5 million up-front cost and performance payments from ordinary operations.

Doghouse

Growth stocks retreated as borrowing costs increased. The yield on ten-year Australian government bonds firmed three basis points. Appen shed 1.2 per cent and Afterpay 2.03 per cent.

Qantas retreated 0.19 per cent after the competition regulator knocked back a bid to coordinate flights with Japan Airlines. The ACCC said the proposed alliance was not in the public interest. The two airlines accounted for around 85 per cent of flights between Australia and Japan before the pandemic.

City Chic Collective fell 2.65 per cent on news Chief Financial Officer Munraj Dhaliwal had resigned after three and a half years with the plus-size retailer.

Among stocks trading ex-dividend, Chorus fell 1.52 per cent and Healius 0.41 per cent. Regis Resources closed flat. HUB24 reversed to a gain of 1.34 per cent

Other markets

Oil added to Friday’s rebound gains. Brent crude rose 37 US cents or 0.5 per cent to US$73.29 a barrel.

Gold overcame early weakness, rising US$2.50 or 0.14 per cent to US$1,794.60 an ounce.

The dollar eased 0.26 per cent to 73.46 US cents.

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