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The share market slashed its loss for the week during the best session of the month as bargain-hunters snapped up blue-chip companies at multi-month lows.

The S&P/ASX 200 rallied 150 points or 2.19 per cent. The rebound trimmed the benchmark’s loss for the week to 188 points or 2.6 per cent.

Several index heavyweights rallied more than 3 per cent after closing yesterday at their weakest levels since March/April. Gold miner Newcrest was one of the few majors to miss the upswing following a disappointing quarterly update.

What moved the market

Investors waiting to “buy the dip” decided this was the day, powering the index to its best session since March 2020. Spearheading the rally were some of the biggest victims of this month-long rout.

Retail conglomerate Wesfarmers bounced 4.21 per cent off yesterday’s 11-month low. Supermarket Coles rebounded 5.02 per cent from its weakest close since April.

Health giant CSL rallied 3.24 per cent, also from an 11-month nadir. Toll road operator Transurban firmed 3.55 per cent from its lowest point since April 2020.

“It seems investors are seeking bargains following a huge fall, buoying the share market,” Kalkine Group CEO Kunal Sawhney said. “Most investors traditionally tend to fancy stocks that have observed a steep correction in their prices lately to fetch lucrative gains as prices rise.”

The domestic market fell into a technical correction yesterday following a month of accelerating down-pressure as global equity and bond markets prepare for higher rates. While today’s rally brought temporary relief, the ASX 200 ended the session more than 600 points below a recent peak on January 5.

Buying interest was supported by a bounce in US equity futures following a well-received after-market trading update from Apple. Shares in the tech giant climbed 5 per cent in extended trade this morning, fuelling a 0.35 per cent rise in S&P 500 futures and a 0.8 per cent advance in Nasdaq futures.

The rise in futures helped offset another volatile overnight session. The S&P 500 faded to a loss of 0.54 per cent after shedding early gains. With a session left, the Dow and S&P 500 both remained on track for a fourth straight weekly loss. The Nasdaq is deep in correction territory and nearing a bear market after falling 17.6 per cent from its November peak. 

“Markets are bracing themselves for a series of rate hikes by the Fed starting March,” Kalkine Group CEO Kunal Sawhney said. “Most of the forecasts are pointing to more than one interest rate hike in 2022, followed by more aggressive monetary policy tightening in the next year. The central bank could continue raising interest rates until inflation is back under control, which currently sits at its highest level in 40 years.

Winners’ circle

Tech stocks and biotechs rallied as a retreat in borrowing costs encouraged bargain-hunters to buy stocks seen as vulnerable to higher rates. Imugene gained 10.53 per cent, Polynovo 9.17 per cent, Clinuvel Pharmaceutical 8.83 per cent and Pro Medicus 7.23 per cent.

Defensive stocks that compete with bonds for investment flows also benefitted from the decline in yields. Supermarket operators Metcash and Woolworths tacked on 2.56 and 3.53 per cent, respectively. Property giant Goodman firmed 4.09 per cent.

Most of the bulk metal producers rallied as iron ore prices continued to defy weakness across the wider commodity complex after the US dollar surged. The spot price for ore landed in China crept up 0.5 per cent to a new four-month high.

“The prices of the steelmaking ingredient are riding high on the back of possible supply disruptions in Australia and a renewed property market boom in China,” Kalkine’s Sawhney said. “Concerns loom that the rising spread of the Omicron variant can disrupt the supply of iron ore, with the coming cyclone season causing an additional worry.”

Rio Tinto climbed 4.09 per cent, BHP 2.74 per cent and Champion Iron 8.75 per cent. Fortescue Metals eased 0.15 per cent.

Macquarie Group was the pick of the major banks, rising 3.95 per cent. Westpac advanced 2.33 per cent, CBA 2.02 per cent, ANZ 1.48 per cent and NAB 1.47 per cent.

Non-bank lender Wisr bounced 8.57 per cent after a record quarter. The firm’s revenues more than doubled, allowing it to declare its first cashflow-positive quarter.

PointsBet bounced 0.8 per cent off a 19-month low after reporting a $51.75 million loss for the quarter. The gaming group took in receipts of $90.4 million and spent $65.6 million on advertising and marketing. Despite the spend, wagering turnover in the US dipped 9 per cent from the prior corresponding period.

Doghouse

Newcrest dropped 6.36 per cent as weak production guidance from its Lihir mine offset a 10 per cent increase in gold production last quarter. The miner said it was on track to deliver on full-year production guidance, but Lihir would achieve the lower end of guidance. All-in sustaining costs declined 11 per cent.

ResMed faded 0.48 per cent after quarterly revenue fell short of consensus targets. Revenues increased 12 per cent last quarter to US$894.9 million, short of the US$926 million anticipated by analysts. The sleep and respiratory specialist will pay a quarterly dividend of 42 US cents per share on March 17.

Tech giant Block slipped 0 97 per cent. Mesoblast shed 3.11 per cent, Ramelius Resources 8.04 per cent and Regis Resources 1.71 per cent.

Other markets

A broadly positive session on Asian markets saw the Asia Dow rise 1.5 per cent, China’s Shanghai Composite 0.08 per cent and Japan’s Nikkei 2.17 per cent. Hong Kong’s Hang Seng dropped 0.84 per cent

Oil recouped a fraction of last night’s 0.7 per cent decline. Brent crude bounced 30 US cents or 0.34 per cent to US$88.47 a barrel.

Gold also revived, rising US$3.60 or 0.2 per cent to US$1,796.70 an ounce.

The dollar faded 0.11 per cent to 70.27 US cents.

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