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Renewed optimism about Russia-Ukraine peace talks helped curb soaring commodity prices and lift Australian shares to their highest in more than a week.
The S&P/ASX 200 rallied 86 points or 1.21 per cent as rising US equity futures sharpened the prospects for tonight’s session.
Gains in banks, Telstra, CSL and supermarkets helped offset pressure on miners and energy stocks as crude oil, copper, gold and grains declined. An earnings upgrade lifted agribusiness Elders 11 per cent.
What moved the market
Risk appetite improved over the weekend as Russia and Ukraine talked up progress in ceasefire negotiations. Officials from both countries suggested talks could yield results within days.
“According to my personal expectations, this progress may grow in the coming days into a joint position of both delegations, into documents for signing,” Russian delegate Leonid Slutsky said.
“I think that we will achieve some results literally in a matter of days,” Ukrainian negotiator Mykhailo Podolyak said.
US equity futures opened higher before tempering gains amid a steep fall in Hong Kong shares. S&P 500 futures were last up 16 points or 0.37 per cent.
Hong Kong’s Hang Seng index slumped 3.81 per cent amid a tech sell-off after China locked down the technology hub of Shenzen to contain a Covid outbreak. The city is home to Chinese tech giants Huawei and Tencent, as well as operations belonging to a major supplier of Apple. The Hong Kong tech index dived 7 per cent.
Elsewhere in Asia, the Asia Dow lost 0.6 per cent and China’s Shanghai Composite 1.3 per cent. Japan’s Nikkei gained 0.91 per cent.
The prospect of a cessation of hostilities in Ukraine eased pressure on commodity markets. Brent crude fell US$1.99 or 1.77 per cent to US$110.68 a barrel.
Gold, a traditional haven in times of geopolitical tensions, backed down US$4.80 or 0.24 per cent to US$1,980.20 an ounce.
Palm oil traded limit down. Wheat fell 0.9 per cent in Chicago. Copper dropped 0.83 per cent on Comex.
The dollar retreated with commodity prices, easing 0.52 per cent to 72.58 US cents.
Weekend developments overshadowed a soft end to the trading week in the US. The S&P 500 fell 1.3 per cent. The Dow sealed a fifth straight losing week with a drop of 0.69 per cent. The blue-chip average’s run of weekly declines is the longest in almost three years.
Winners’ circle
The heavily-weighted banks provided much of the session’s momentum as Australian government bond yields retested Friday’s three-year high. The rally came ahead of what is expected to be the first increase in official US rates since 2018. Lenders welcome higher rates for the opportunity to expand margins.
ANZ put on 2.82 per cent, CBA 2.64 per cent, Westpac 2.47 per cent and NAB 1.47 per cent. Other heavyweights to see gains included CSL +2.63 per cent, Coles +2.22 per cent, Telstra +1.56 per cent and Woolworths +0.91 per cent.
Fertility clinic operator Virtus Health jumped 7.53 per cent after accepting an improved takeover offer from European investment firm CapVest. Virtus shareholders will receive $8.25 per share, less any dividend paid after today. The deal ends a fierce bidding war between CapVest and Australian private-equity firm BGH Capital.
Tailwinds for agribusinesses were underscored by an earnings upgrade from Elders. Shares in the company climbed 11 per cent to a 12-year high on news the company expects full-year underlying earnings to be 20-30 per cent above last year’s result.
Grain prices have soared this year after the Russian invasion of Ukraine dented supply from two of the world’s largest producers. GrainCorp rallied 3.44 per cent.
Ampol firmed 2.63 per cent after securing a buyer for its Gull business in New Zealand. Australian investment manager Allegro will pay $532 million for the operation, which includes 112 petrol stations and an import terminal.
Day trader favourite Melbana Energy entered a trading halt to raise funds. The share price had increased 600 per cent since the start of the year as the company drilled a Cuban oil prospect.
Junior explorer Globalith jumped 6.58 per cent after gaining Mineral Resources as a cornerstone investor. Mineral Resources took a 5 per cent stake in Globalith as part of a $29.9 million capital raising. Shares in Mineral Resources edged up 0.84 per cent.
Doghouse
Magellan fell 1.41 per cent to a fresh seven-year low as market volatility compounded net outflows at the asset manager. Funds under management dropped to $69.1 billion by the end of last week from $77.2 billion on February 23.
Westgold Resources skidded 12.7 per cent after raising $100 million from investors at a discount. The funds will be used to accelerate the gold miner’s growth strategy and expand production. The share price held just above the raising price of $2.10 at $2.13.
Nickel miner IGO Ltd slid 1.96 per cent after disruptions to the nickel market delayed a proposed merger with Western Areas. IGO said it expected a “short delay” as Western Areas and an independent expert considered the implications of recent dislocations in metals markets. The London Metal Exchange suspended nickel trade last week after prices more than doubled.
Woodside Petroleum eased 0.19 per cent as crude began the week on the back foot. Santos lost 0.26 per cent.
Uranium miner Paladin Energy shed 7.47 per cent. Newcrest and Fortescue Metals gave up 1.04 per cent, BHP 0.69 per cent and Rio Tinto 0.52 per cent.
