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March came in like a lion: the share market roared back from last week’s sell-off, spurred by rising US futures and RBA action on borrowing rates.

The S&P/ASX 200 bounced 116 points or 1.74 per cent, reversing more than two-thirds of Friday’s loss.

What moved the market

Bond proxies led the recovery after the Reserve Bank stepped in to soothe a jittery bond market. The central bank offered to buy $4 billion in long-dated bonds this morning, twice its usual purchase. The yield on ten-year Australian bonds promptly dived as much as 32 basis points, the biggest decline in at least a year.

The intervention came after yields surged 50 basis points last week – the equivalent of a 0.5 per cent increase in the cash rate. The rise pushed the dollar briefly above 80 US cents and threatened to derail the central bank’s strategy of keeping borrowing rates low to assist the economy.

“The RBA is in the same camp as every major central bank – they want their economies to recover but they’re more and more dependent on low interest rates,” Eric Robertsen, chief strategist at Standard Chartered Bank, told Bloomberg.

The fall in yields increased buying interest in equities that compete with bonds for investment funds. REITs jumped 3.3 per cent. Healthcare gained 2.7 per cent, communications 2.4 per cent and utilities 1.7 per cent. Tech stocks were boosted by a bounce in the Nasdaq Composite on Friday, advancing almost 3 per cent.

The session’s economic data signalled the RBA faces an uphill battle to contain inflation. House prices climbed 2.1 per cent last month, the biggest increase since 2003, according to CommSec. Petrol pump prices surged above $1.60 a litre. Job advertising jumped 7.2 per cent to its highest level in 28 months.

US futures ripped higher after President Joe Biden’s stimulus package cleared the House of Representatives on Saturday and US regulators approved Johnson & Johnson’s one-shot Covid vaccine. S&P 500 futures surged 26 points or 0.7 per cent. Nasdaq futures gained 1 per cent.

Winners’ circle

REITS, healthcare and other bond surrogates surged as the RBA’s intervention drove down yields. Property giant Goodman Group put on 4.1 per cent, biotech CSL 3 per cent, conglomerate Wesfarmers 3 per cent, Telstra 2.3 per cent and supermarket Woolworths 2.3 per cent.

Growthpoint Property climbed 3.8 per cent, Stockland 5.5 per cent and Charter Hall Group 5.6 per cent. In the health space, Fisher & Paykel gained 1.7 per cent and Ramsay 3.2 per cent. Utilities APA Group and AusNet put on 1.9 and 2.4 per cent. AGL Energy added 0.8 per cent.

BNPL players recovered from a dour week, encouraged by the Nasdaq’s outperformance on Friday. (The tech-heavy index bounced 0.56 per cent, versus a 1.5 per cent drop on the Dow.) Zip Co climbed 5.5 per cent, Afterpay 5.1 per cent and Sezzle 0.5 per cent.

On the wider tech front, Altium climbed 2.7 per cent despite going ex-dividend. Xero gained 3.5 per cent and Nearmap 3.1 per cent.

CBA led a recovery in the big four banks, rising 3.1 per cent. NAB gained 2 per cent, Westpac 1.6 per cent and ANZ 1.6 per cent. Macquarie Group put on 2 per cent.

Austal continued to heal from last week’s news of an investigation into its US operations. The ship builder climbed 8.4 per cent on a US Navy contract win and after its Philippines division completed the largest high-speed ferry the company had ever constructed.

Crown Resorts climbed 1.5 per cent following the resignation of director John Poynton.  

AJ Lucas doubled in value after announcing a return to profit. The drilling services provider swung to a net profit of $9.9 million last half from a net loss of $10.3 million in HY20. The turnaround was fuelled by strong domestic demand. Shares in the company surged 108 per cent.  

Doghouse

Fortescue Metals dived 5.9 per cent as it paid out a record dividend. Rio Tinto edged up 0.4 per cent and BHP gained almost 2 per cent.

Gold stocks felt the heat from a fourth straight decline in the yellow metal. Ramelius Resources gave up 3.5 per cent, Silver Lake 3.5 per cent and Perseus 3 per cent. Newcrest dropped 0.7 per cent.

Evolution Mining declined 2.6 per cent as it traded without its dividend. Other stocks going ex-dividend included Aurizon -1.1 per cent and Bingo Industries +0.6 per cent.

Genworth Mortgage tumbled 6.2 per cent after its US parent company sold its entire 52 per cent stake in the ASX-listed operation.

Other markets

Asian markets delivered solid returns. The Asia Dow put on 1.57 per cent. China’s Shanghai Composite advanced 0.52 per cent, Hong Kong’s Hang Seng 1.2 per cent and Japan’s Nikkei 2.08 per cent.

Oil rebounded from Friday’s sell-off. West Texas Intermediate crude bounced 88 cents or 1.4 per cent to $US62.37 a barrel. Gold also staged a recovery, rising $18.30 or 1.1 per cent to $US1,747.10 an ounce.

The dollar got a morning boost from the RBA’s bond purchases, but was lately down 0.09 per cent to 77.45 US cents.

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