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The share market surged to its highest close in almost seven weeks as positive US leads and hopes for a slowdown in global interest rates outweighed a sharp increase in Chinese Covid cases and weak Chinese economic data.

The S&P/ASX 200 rallied 78 points or 1.15 per cent to 6863.5. This afternoon’s close was the highest since September 13.  

Tech and consumer stocks set the pace. Energy producers and gold miners sagged with crude and precious metals prices. GrainCorp took wing as grain prices soared in response to Russia’s withdrawal from a deal to allow Ukrainians exports.

What moved the market

The Australian market rallied for the fifth time in six sessions as investors bet a long-awaited slowdown in global interest rate increases will gain momentum this week. The RBA meets tomorrow. The US Federal Reserve announces its decision on Thursday morning, Australian time.

With one trading day left in October, the Dow Jones Industrial Average is on course for its best month since 1976. The US blue-chip average jumped 2.59 per cent on Friday to extend its gain for the week to 5.37 per cent. For the month, the industrial average was up 14.4 per cent.

The ASX 200 gained a comparatively modest 6 per cent for October. Stocks retested the June lows before catching a tailwind from the Reserve Bank’s decision to raise the cash rate target by a smaller-than-expected 25 basis points.

The bank meets tomorrow in the wake of mixed signals about inflation and the health of the economy. Reports today showed retail spending remained strong last month, but inflationary pressures receded.  

Such was the momentum from the US that the ASX took in its stride negative developments out of China. Covid cases jumped from 802 to 2,675 in a single day as China battled outbreaks in several cities. The increase was the largest since August.

Reports this morning showed Chinese factory and services activity contracted last month amid creeping lockdowns to contain the latest outbreaks. The China Federation of Logistics and Purchasing manufacturing PMI fell to 49.2 this month from 50.1 in September. The services PMI dived to 48.7 from 50.6 last month.

Readings below 50 indicate shrinking activity. Both measures were weaker than expected.

Winners’ circle

GrainCorp jumped 7.86 per cent after Russia announced plans to walk away from a UN-brokered deal to allow Ukraine to export grain. The decision lit a fire under grain prices. Wheat futures jumped almost 8 per cent in the US. Corn gained 2.8 per cent and soybean oil 3 per cent, according to Bloomberg.

Nitro Software surged 20.23 per cent to $2.08 after a US software company topped a takeover offer for the company from Potentia Capital. Alludo offered $2 cash per share, besting an offer last week from Potentia to acquire at $1.80 per share all the shares in Nitro it does not already own.   

Autoparts company ARB rallied 7.52 per cent following Friday’s AGM announcements. Home Consortium gained 7.87 per cent and lithium miner Lake Resources 7.61 per cent.

The tech sector bounced 2.6 per cent after the Nasdaq shrugged off weakness from earlier in the week. Nanosonics gained 7.03 per cent, Xero 4.61 per cent and Block 3.06 per cent.

Wesfarmers and CSL were the pick of the heavyweights, rising 3.22 and 2.27 per cent, respectively. Macquarie Group added 1.8 per cent. The high-street banks gained between 0.5 and 1.41 per cent.

Record quarterly nickel production helped lift Nickel Industries 4.29 per cent. Sales revenues improved 1.2 per cent despite a 20 per cent decline in realised prices.

Progress in a clinical trial lifted biotech Imugene 6.06 cent. The immuno-oncology company said the first patient in a Phase 1 trial of a cancer-killing virus had been dosed within intratumoral cohort 2.  

Coal miner Coronado finished flat as the prospect of a special dividend helped offset the impact of wet weather on production last quarter. The miner said merger talks with US giant Peabody Energy were continuing, but no transaction had been agreed.

Doghouse

Declines in key commodities weighed on resource stocks. Crude, iron ore and metals retreated as China battled an upsurge in Covid.

Oil turned negative after today’s China data. Brent crude declined 74 US cents or almost 0.8 per cent to US$95.03 a barrel after earlier trading well above US$96.

Iron ore continued to slide this afternoon, falling 3.2 per cent in China. Copper declined 0.3 per cent in early trade on the London Metal Exchange.

BHP shed 0.32 per cent, Rio Tinto 0.4 per cent and Fortescue Metals 0.41 per cent. Gold miner Newcrest fell 2.58 per cent, energy producer Santos 0.9 per cent and Woodside Energy 0.06 per cent.

Payments platform EML slumped 35.71 per cent after regulatory concerns forced its British subsidiary to suspend taking on new customers, agents and distributors. The pause will allow EML to address concerns similar to those raised by the Irish regulator. EML expects the suspension to knock less than $5 million off full-year revenues.

Vicinity Centres fell 0.26 per cent on news CEO and Managing Director Grant Kelly will retire after five years at the helm.

Other markets

Asian markets were mixed but mostly higher. The Asia Dow gained 2.01 per cent. Japan’s Nikkei advanced 1.58 per cent. Hong Kong’s Hang Seng shook off initial weakness to rise 0.89 per cent. China’s Shanghai Composite dipped 0.03 per cent.

US futures traded lower. S&P 500 futures were off seven points or 0.18 per cent at the Australian close.

Gold bounced US$2.10 or 0.13 per cent to US$1,646.90 an ounce.

The dollar firmed 0.3 per cent to 64.2 US cents.

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