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The share market secured its highest close in a week as Commonwealth Bank neared $100 per share and miners rode a rebound in iron ore and copper.
The S&P/ASX 200 rallied 42 points or 0.6 per cent to a third day of gains.
Commonwealth Bank fell just short of the $99 level en route to a tenth straight record. BHP, Rio Tinto and Newcrest steered the materials sector higher. Under-siege data analytics firm Nuix bounced more than 11 per cent. A production downgrade sent miner St Barbara down 9 per cent.
What moved the market
Strength in Asia and a rebound in US futures helped investors look beyond Wall Street’s first decline in three sessions. The Asia Dow climbed 1.91 per cent this afternoon. Hong Kong’s Hang Seng added 1.17 per cent. Japan’s Nikkei gained 2.23 per cent. China’s Shanghai Composite inched up 0.19 per cent.
US futures recovered from a resurgence of inflation concerns. S&P 500 futures advanced 13 points or 0.32 per cent, more than reversing the index’s 0.25 per cent loss overnight.
A benign outlook from the Reserve Bank helped reassure investors this era of easy money has years to run. The minutes from this month’s Reserve Bank policy meeting released this morning showed the board expects headline inflation to spike to 3 per cent this year before fading below 2 per cent.
“In the baseline scenario, underlying inflation was expected to increase from 1½ per cent over 2021 to close to 2 per cent by mid 2023. Headline inflation was expected to spike above 3 per cent over the year to June 2021, partly as the effect of COVID-19-related one-off price changes dropped out of the calculation, before declining back below 2 per cent over the remainder of the forecast period,” the minutes noted.
The board reaffirmed its intent to keep the cash rate at a record-low 0.1 per cent “until actual inflation is sustainably within the 2 to 3 per cent target range… The Board viewed these conditions as unlikely until 2024 at the earliest.”
The bank’s outlook broadly mirrored comments in the US by Federal Reserve committee member Raphael Bostic overnight. Bostic, president of the Atlanta Federal Reserve, said the central bank would maintain its stimulatory stance until the economy had fully recovered.
“We are still eight million jobs short of where we were pre-pandemic,” Bostic told CNBC. “Until we make substantial progress to close that gap, I think we’ve got to have our policies in a very strongly accommodative situation or stance.”
Winners’ circle
The big three bulk metal producers marched higher after iron ore bounced 3.7 per cent and industrial metals recovered. Rio Tinto rose 2.12 per cent, BHP 1.85 per cent and Fortescue Metals 2.03 per cent. Champion Iron climbed 2.23 per cent to an all-time high. Copper miner Oz Minerals gained 6.41 per cent.
Ore prices rebounded yesterday after data showed Chinese steel production running at record pace last month despite a regulatory clampdown on pollution. Analysts said prices reflected strong demand and weak supply.
“As China’s steel production still continues to expand, its steel margins remain elevated and seaborne iron ore supply remains constrained, we think that the iron ore price can stay around the current level through 2Q, but is likely to remain highly volatile,” analysts at Morgan Stanley wrote.
The ASX index of gold miners followed the metal price to four-month highs. Evolution Mining gained 4.88 per cent, Perseus 4.3 per cent and Newcrest 1.09 per cent. Gold, a traditional hedge against inflation, has been one of the big winners of the latest bout of market nerves over rising price pressures.
Aristocrat Leisure climbed 3.47 per cent back towards yesterday’s record high. The poker machine manufacturer yesterday upgraded its half-year outlook.
Commonwealth Bank notched a tenth straight record high before fading to a loss of 0.03 per cent. The largest of the big four banks rose as high as $98.84 before closing at $97.76. The bank has significantly outperformed its peers following recent trading updates. ANZ rallied 1.43 per cent today, NAB 1.23 per cent and Westpac 0.51 per cent. Macquarie Group bounced 2.35 per cent after going ex-dividend yesterday.
Other notable gains at the pointy end of the market included Telstra +1.17 per cent, Woodside +2.09 per cent and Woolworths +0.59 per cent.
Nuix rebounded 11.46 per cent from yesterday’s record low as the data analytics firm reassured investors the outlook was secure. The share price tanked yesterday amid media speculation about governance and communication. Chair Jeff Bleich said the company had not managed the transition from private to public as well as it might.
Doghouse
Miner St Barbara missed the upswing in the gold sub-sector after downgrading production guidance. Disappointing mining rates at the Simberi mine in PNG and a shortfall in personnel at the Leonora mine contributed to the decision to cut full-year guidance to 330,000-360,000 ounces from previous guidance of 370,000-380,000. The share price dived 9.02 per cent.
Fiber cement giant James Hardie sank 4.51 per cent after warning of rising costs. While the company expects income to increase by 14-24 per cent next financial year, the profit outlook will be crimped by increased freight and pulp costs.
Avita Medical dived 10.28 per cent to its weakest level in more than two years. The burns injury specialist reported third-quarter results last week.
The tech sector hovered near seven-month lows as the spectre of rising inflation continued to weigh. Nearmap fell 2.65 per cent, Nanosonics 1.75 per cent and Altium 0.86 per cent.
Headphones manufacturer Audeara sank 15 per cent upon listing.
The biggest drags this session included Goodman -1.49 per cent, Transurban -1.21 per cent and Wesfarmers -0.17 per cent. AGL Energy fell 0.24 per cent to its lowest level since 2004.
Other markets
Oil added to overnight gains. Brent crude climbed 21 cents or 0.3 per cent to US$69.67 a barrel.
Gold rose $3.30 or 0.18 per cent to US$1,870.90 an ounce.
Improving commodity prices helped raise the dollar 0.15 per cent to 77.85 US cents.
