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The share market sealed its longest winning run of the year, fuelled by winners from severe price dislocations on commodity markets as customers shun Russian exports.
The S&P/ASX 200 climbed 35 points or 0.49 per cent to a fifth straight advance.
Miners, oil producers and grain companies spearheaded the rally. Defensive stocks including gold miners, healthcare providers and supermarkets kept gains in check.
What moved the market
The growing realisation Australian exports might be a net winner from the war in Ukraine put a floor under the ASX last week and has kept it grinding higher ever since. The current win streak is the longest since the Santa Rally across Christmas.
Commodities with a large Russian footprint soared this week as western customers snubbed Russian exports. Bloomberg reported cargoes of Russian crude failed to attract a bid, even at a record discount to the price of Brent.
“The Russian oil producer, Surgutneftegas, failed for the third time to sell Urals crude via its regular tender,” ANZ senior commodities strategist Daniel Hynes wrote. “Oil trader, Trafigura, also tried to sell a cargo of the country’s main export grade, but failed. This has seen the Urals crude offered at a record discount of USD18.60/bbl to the benchmark prices for delivery to northwest Europe.”
CommSec’s daily commodity index has jumped a record 22.6 per cent in four days. Bloomberg’s commodity spot index was on track for its best week since 1960.
Aluminium hit a new peak overnight as warehouse supplies dwindled. European natural gas also traded at a record after climbing more than 40 per cent in a week. Wheat traded limit up today in Chicago.
The ASX energy sector soared to a second-straight pandemic-era high this afternoon as a parabolic rally in crude continued. The materials sector pushed back within touching distance of last year’s record.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) met overnight and showed no appetite for increasing production by enough to rein in prices. The cartel agreed to produce an additional 400,000 barrels a day next month, as previously planned.
“The group, which includes Russia, ratified the 400kb/d production increase that was already scheduled for April in a meeting that lasted only 15 minutes. Mexican Energy Minister, Rocio Nahle, tried to raise the subject of Russia but other members swiftly moved on to other matters without discussion,” Hynes said.
Today’s ASX highlights included a post-pandemic high for Woodside Petroleum. BHP cracked $50 a share for the first time since August. Whitehaven Coal neared a three-year peak. Agribusiness GrainCorp entered record territory.
So-called commodity currencies such as the Australian and Canadian dollars have also benefitted from Russia’s woes. The Aussie sat at 73 US cents this afternoon, supported by expectations the economy will gain a lift from surging commodity prices.
Wall Street rebounded overnight after investors were reassured that the Ukraine war will not deflect the Federal Reserve from raising rates this year. Fed Chair Jerome Powell indicated the central bank was committed to lifting its target range by 25 basis points in two weeks’ time.
The S&P 500 rallied 1.86 per cent, reversing Tuesday’s loss. The Dow and Nasdaq also advanced.
Winners’ circle
GrainCorp climbed 1.75 per cent to a record amid increased demand from Asia as the war in Ukraine potentially removes up to 30 per cent of global wheat supply. Rural supplier Elders firmed 1.19 per cent.
Woodside Petroleum jumped 2.96 per cent to a level last seen in the first month of the pandemic sell-off. Santos gained 1.69 per cent. Beach Energy put on 4.67 per cent.
BHP rose 3.6 per cent to $50.06. Today’s close was the highest since last year’s collapse in iron ore prices. Rio Tinto also scored a seven-month high, rising 3.72 per cent. Fortescue Metals firmed 4.2 per cent.
Whitehaven Coal neared $4 for the first time since May 2019. The miner rallied 10.61 per cent to $3.96.
A week of wild swings in gaming group PointsBet continued with a surge of 18.21 per cent.
Lithium miner Lodestar Minerals firmed 30 per cent on the launch of a soil sampling program to test a promising anomaly at the Coolgardie West project. Managing Director Bill Clayton said the target was “one of the more compelling lithium soil anomalies I have seen”.
Junior explorer Viking Mines briefly jumped more than 50 per cent after the first results from its Jana’s Reward target at the First Hit project in WA intersected “bonanza grades”. CEO and Managing Director Julian Woodcock said the results were “extremely encouraging”. The share price ultimately finished unchanged.
Doghouse
The dividend payments season is well underway. Supermarkets Coles and Woolworths were among the major drags as they traded without their dividends. Coles shed 3.58 per cent. Woolies dipped 3.21 per cent.
Also trading ex-dividend were InvoCare -4.38 per cent, ASX Ltd -3.11 per cent and Nine Entertainment -2.16 per cent.
Theme park operator Ardent Leisure eased 0.64 per cent after acquiring three family entertainment centres in Colorado for US$26 million.
Perfume retailer Dusk dropped 0.65 per cent after scrapping plans to acquire candle component supplier Eroma. Dusk said preconditions for the acquisition had not been satisfied.
Other markets
Asian markets followed European and US markets higher. The Asia Dow tacked on 0.86 per cent, China’s Shanghai Composite 0.1 per cent, Hong Kong’s Hang Seng 0.49 per cent and Japan’s Nikkei 0.8 per cent.
US futures held broadly steady. At the Australian close, S&P 500 futures were ahead two points or 0.05 per cent.
Oil continued its bull run. Brent crude charged up another US$4.50 or 4 per cent to US$117.43 a barrel.
Gold recovered some of its overnight losses, rising US$4.40 or 0.23 per cent to US$1,926.70, an ounce.
