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Australian shares snapped a seven-session losing run after the Reserve Bank downplayed fears of a jumbo interest rate rise next month.

The S&P/ASX 200 bounced 90 points or 1.41 per cent.  

Energy producers and banks led the advance following gains in European stocks and US equity futures during a US market holiday.

Coal miners plunged after Queensland increased mining royalties to take advantage of record prices.

What moved the market

Stocks picked themselves off a 19-month low as a US holiday gave investors a chance to reassess after two weeks of relentless selling. European stocks rebounded overnight. The pan-European Stoxx 600 index gained 0.96 per cent.

A steady rise in US equity futures sharpened hopes for a positive session tonight. S&P 500 futures were up 52 points or 1.42 per cent as the Australian session neared its conclusion.

“Stock futures are shaking off some of the pessimism that we saw last week, and this is pointing to a higher open for both the European and US [markets],” Naeem Aslam, chief market analyst at AVATrade, said.

“There is no doubt that the equity markets on both sides of the world have been massively oversold, bargain hunters have been preparing their lists for a while, and now they are out shopping.”

The Australian market added to gains after the Reserve Bank threw cold water on the prospect interest rates will hit 4 per cent this year. Governor Philip Lowe told a Sydney audience he thought it “unlikely”.

Lowe also doused worries that the bank will follow the US Federal Reserve by raising the cash rate target by 75 basis points next month. Lowe said he expected discussions to revolve around whether to hike by 25 or 50 points.

“The board discussed 25bp or 50bp increase to cash rate at the June meeting and I expect to discuss 25bp and 50bp in July,” he said.

Consumer confidence improved a fraction last week, but remained near two-year lows. The ANZ-Roy Morgan confidence index edged up 1.6 per cent, reclaiming a fraction of the previous week’s 7.6 per cent slide. Across the pond, Westpac’s New Zealand confidence index hit a record low.

Winners’ circle

Mining and energy stocks rebounded after key commodity prices recovered overnight. Uranium miner Paladin Energy bounced 7.96 per cent, coal miner Whitehaven 5.29 per cent and Nickel Industries 6.03 per cent.

Diversified miner OZ Minerals gained 5.91 per cent. Beach Energy put on 4.52 per cent.

Among the heavyweights, Fortescue Metals firmed 3.47 per cent, Woodside Energy 3.26 per cent and Rio Tinto 2.27 per cent.

The high-street banks mounted their biggest rally in more than a month after the financial sector spearheaded gains in Europe. NAB put on 3.8 per cent, Westpac 2.71 per cent, ANZ 2.62 per cent and CBA 2.42 per cent.

Confirmation of full-year guidance lifted GrainCorp 4.95 per cent. The agribusiness expects to increase earnings by 90 per cent this year.

Australian Agricultural Company edged up 0.89 per cent despite news Managing Director and CEO Hugh Killen will stand down after four years at the helm. Chief Operating Officer Dave Harris will act as CEO until a permanent replacement is found.

Explorer Lode Resources briefly doubled in value after intersecting high-grade silver-lead-zinc-copper mineralisation at shallow depths at its Tangoa West prospect in NSW. The share price jumped from 15 cents yesterday to 34 cents before paring its advance to 20 cents, a gain of 33.33 per cent.

Doghouse

Coal miners plunged after the Queensland government unveiled a tiered system that will direct more royalties into state coffers. The new system increases the government’s percentage take as prices rise.

The unexpected announcement caused carnage. Stanmore Resources briefly lost a fifth of its value before trimming its loss to 9.85 per cent. Coronado shed 6.99 per cent. Terracom dropped 15.38 per cent.

Healthcare and property companies eased as investors favoured sectors with more upside in a market recovery. CSL dropped 1.15 per cent, Sonic Healthcare 2.1 per cent and Cochlear 1.55 per cent.

Goodman Group retreated 0.9 per cent, Mirvac 2.86 per cent and Centuria REIT 2.03 per cent.

Digital health firm ResApp slumped 28.57 per cent after test results of its Covid-19 smartphone algorithm failed to meet the terms of an increased takeover offer from global giant Pfizer. The Data Confirmation Study produced results below the thresholds, meaning conditions for an offer of 20.7 cents per share were not met. Instead, ResApp said shareholders will receive a lower offer of 14.6 cents per share.

Premier Investments dropped 2.29 per cent as its shares traded without the right to the latest dividend.

Other markets

A broadly positive session on Asian markets saw the Asia Dow put on 1.73 per cent, Hong Kong’s Hang Seng 1.42 per cent and Japan’s Nikkei 2.13 per cent. China’s Shanghai Composite fell 0.43 per cent.

Oil added to last night’s gains. Brent crude rose 93 US cents or 0.8 per cent to US$115.06 a barrel.

Gold declined US$3.30 or 0.2 per cent to US$1,837.30 an ounce as the US dollar rallied.

The dollar drifted down 0.17 per cent to 69.56 US cents.

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