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Aussie shares rose for a second day after the Reserve Bank upgraded its economic growth and employment forecasts.

The S&P/ASX 200 climbed 39 points or 0.56 per cent, finishing within 15 points of last week’s pandemic-era closing peak.  

Gold miners outperformed as the materials and energy sectors spearheaded the advance. Tech stocks declined.  

What moved the market

The market finished near session highs after the RBA left its key policy settings unchanged, as expected. The bank kept both the cash rate and its target for the three-year government bond yield at 0.1 per cent. Governor Philip Lowe said the Australian economy had performed stronger than expected, but inflation and employment remained below targets.

“The global economy is continuing to recover from the pandemic and the outlook is for strong growth this year and next,” he said. “The recovery remains uneven, though, and some countries are yet to contain the virus. Global trade in goods has picked up strongly and commodity prices are mostly higher than at the start of the year. However, inflation remains low and below central bank targets.”

The bank expects unemployment to fall from 5.6 per cent in March to 4.5 per cent by the end of next year and for GDP to grow 4.75 per cent this year and 3.5 per cent next year. Mr Lowe reiterated that the board does not expect to raise the cash rate until 2024 at the earliest.

“It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest,” he said.

Gold stocks surged after a slide in the US dollar helped the precious metal to its first advance in five sessions. Gold rallied $24.10 or 1.4 per cent overnight to US$1,791.80 an ounce, then retreated $5.40 in recent action.  

“Rising coronavirus cases in India, coupled with weakness in bond yields and the US dollar delivered a boost to gold prices overnight, cutting off some of the previous losses. As gold prices traded firm, Australian gold miners like Ramelius Resources (ASX:RMS), Silver Lake Resources (ASX:SLK) and Northern Star Resources Limited (ASX:NST) can be seen storming higher today,” Kalkine Group CEO Kunal Sawhney said.

Five of the ASX 200’s top six performers were gold miners. Ramelius Resources gained 7.9 per cent, Silver Lake 7.65 per cent, Resolute 7.37 per cent, Gold Road 4.86 per cent and Regis 4.28 per cent. Industry heavyweight Newcrest put on 1.45 per cent.

Winners’ circle

ASX action largely mirrored Wall Street’s overnight shifts. Energy and materials led, boosted by a ten-year high in copper, near-record iron ore prices and rebounds in oil and gold. The tech sector retreated. Only the financial sector ignored the US lead, taking a breather after lifting the index virtually single-handed yesterday.

BHP led a rebound in bulk metal producers, rising 2.55 per cent. Rio Tinto added 2.53 per cent. Fortescue trailled with a rise of 0.8 per cent.

Energy giants Woodside and Santos jumped 1.51 and 2.35 per cent, respectively. Oil Search gained 2.14 per cent and Beach Energy 1.96 per cent. Coles put on 1.41 per cent, Brambles 1.06 per cent and Wesfarmers 0.73 per cent.

A profit upgrade lifted Seek to an all-time high. The online employment marketplace raised its full-year net profit outlook to $150 million from $100 million after trading conditions over the first nine months of the year surpassed expectations. The share price hit a record $32.91 before trimming its advance to 1.85 per cent at $31.30.

Nine Entertainment edged up 2.48 per cent on news of a 20 per cent increase in digital subscription revenue and a double-digit reduction in costs. The media group also said it was nearing 150,000 subscribers to its new Stan Sports offering.

News that sales increased by 28 per cent over the first 44 weeks of this financial year versus the same period in FY2020 helped lift Super Retail Group 0.69 per cent. The increase was driven by strong growth at the company’s BCF and Macpac outlets.

NIB Holdings edged up 0.16 per cent after touching a 16-month high on news it had sold its digital healthcare directory platform to Commonwealth Bank for $9 million.

Doghouse

Westpac trimmed yesterday’s 5 per cent interim earnings-fuelled surge, falling 0.91 per cent. ANZ retreated 0.93 per cent ahead of tomorrow’s half-year report. NAB, which reports on Thursday, inched up 0.07 per cent. CBA put on 0.84 per cent.

The tech sector followed the Nasdaq lower. Megaport declined 4.2 per cent, Altium 3.18 per cent, Afterpay 2.82 per cent, Nanosonics 2.53 per cent and WiseTech 2.47 per cent.

Flight Centre slid 4.61 per cent despite reporting a strong rebound in business. The travel agent said March turnover increased by $100 million or 32.7 per cent over February and it expected further growth last month. The company does not expect to return to profitability until next financial year.

Nick Scali slumped 2.62 per cent despite news the furniture retailer expects this year’s full-year net profit to increase 85 – 90 per cent from last financial year. The company expects earnings to be around $120 million for the year.

An increased cost base took some of the shine off a trading update from Domain Holdings. The real estate listings group said total revenue increased by 8 per cent last quarter, driven by an 8 per cent rise in digital revenue. However, the company also said it expects total costs to increase in the mid-single digits this financial year from $177.2 million last financial year. The share price eased 2.95 per cent.

Other markets

US futures wilted as most Asian markets declined. S&P 500 futures slipped nine points or 0.19 per cent this afternoon. The Asia Dow dropped 0.14 per cent. Hong Kong’s Hang Seng bounced 0.48 per cent. Markets in China and Japan remained closed for holidays.

Oil trimmed last night’s gains. Brent crude eased two cents or 0.03 per cent to US$67.54 a barrel.

The dollar retreated 0.24 per cent to 77.4 US cents.

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