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A record trade surplus and a rebound in iron ore and other exports helped power the share market to its third gain of the week.

The S&P/ASX 200 rallied 53.5 points or 0.81 per cent to 6648.

Bulk metal miners provided most of the momentum, with support from supermarkets and most of the banks.

The domestic gold mining index fell to its lowest in three and a half years. Tech stocks gave back some of yesterday’s bumper gains.

What moved the market

The market moved past yesterday’s commodities wobble as iron ore, crude oil and copper rebounded. Iron ore climbed 3.5 per cent this afternoon on the Dalian Commodity Exchange.

Brent crude overcame early weakness to advance 16 US cents or 0.16 per cent to US$100.88 a barrel. Overnight, the US benchmark, West Texas Intermediate, slipped into a bear market after falling more than 20 per cent from its March peak.

Copper bounced off a near 20-month low. Benchmark copper on the London Metal Exchange firmed 1 per cent to US$7,596 a tonne today after trading as low as US$7,291.50 overnight.  

The gains helped the materials sector rise almost 2.5 per cent off yesterday’s eight-month low. This week’s collapse in prices came as investors reassessed the demand implications of a global economic slowdown. “Soft commodities” such as wheat, corn and soybeans also declined amid weak demand signals.

Data this morning showed the export market continued to roar ahead in May, lifting the trade surplus to a record $136 billion for the year.

“Australia has clocked up an amazing 53 consecutive monthly trade surpluses and there are no signs of deficits emerging any time soon. The monthly May trade surplus was a record as was the annual surplus,” CommSec chief economist Craig James said.  

“The income flowing into Australia is supporting Aussie businesses at a crucial time – a time when fears of recession are being expressed.

“Both exports and imports were at record highs in May – indicating a buoyant economy but also reflecting higher prices.”

ASX buying interest has been sustained by a modest but steady improvement this week on Wall Street. The S&P 500 firmed 0.36 per cent overnight after the Federal Reserve appeared to open the door to a smaller rate increase this month than the market anticipated.

The S&P 500’s three-session winning run is the longest since May, sharpening hopes this year’s bear market may be easing.

Winners’ circle

The mining heavyweights bounced with iron ore prices after dragging the market to a loss yesterday. Rio Tinto rallied 4.08 per cent. Fortescue Metals firmed 4.37 per cent. BHP gained 3.12 per cent.

A nickel-copper strike at the Dampier Target north-east of Perth boosted Chalice Mining 6.67 per cent. Initial diamond drill testing 10km from the miner’s Gonneville Deposit generated “exciting early visual results”.  

Other miners to rebound included South32 +4.82 per cent, Minerals Resources +4.52 per cent and Nickel Industries +3.87 per cent.

The major supermarkets rose for a third session. Woolworths climbed 0.35 per cent to a seven-week high. Coles put on 0.44 per cent.

Link Administration firmed 6.27 per cent after suitor Dye & Durham raised its takeover offer. A week and a half after cutting its offer from $5.50 per share to $4.30, the Canadian software firm came back with a revised bid of $4.57. Link said it would consider the revised offer.

Investment manager Pinnacle gained 7.63 per cent on news of strong second half improvement in performance fees. The firm will take in $16.4 million in performance fees for the full year, thanks to a $10 million surge in the second half.

Bendigo Bank gained 1.08 per cent after acquiring ANZ’s $715 million investment lending portfolio for a little over book value. Bendigo said the premium to be paid was “immaterial” and the acquisition would be funded through ordinary business operations.

Doghouse

The ASX gold index slumped to its lowest since October 2018 after the precious metal’s losing run extended into a seventh session overnight. The yellow metal is the most prominent victim of a rally that has lifted the US dollar index to a 20-year high. A stronger dollar raises the cost of dollar-denominated commodities for holders of other currencies and dulls interest in hedges.

“The precious metal is on track to record a brutal week in terms of its prices. The sell-off for gold prices over the last two days has been intense due to the strength of the [US] dollar. Traders continue to bet that the Fed’s commitment in terms of controlling inflation is purely unconditional, and they aren’t going to stop until they bring inflation closer to their target of2%,” Naeem Aslam, chief market analyst at AVATrade, said.

De Grey dropped 3.07 per cent, Silver Lake Resources 1.57 per cent and Perseus 1.56 per cent. Newcrest pivoted late morning to a gain of 0.77 per cent.

Profit-takers took advantage of yesterday’s strong rally in payment companies. EML dropped 9.86 per cent, Zip Co 5.22 per cent and Block 1.26 per cent.

Bubs Australia fell 9.02 per cent towards this week’s capital raising price. The infant formula manufacturer will supply two additional flights to the US to help with a nationwide formula shortage.

Inclusion in the US Russell 2000 index of small caps failed to arrest a slide in Piedmont Lithium. Shares in the out-of-favour miner declined 1.9 per cent to an 18-month low.

Other markets

A mixed session on Asian markets saw the Asia Dow rise 1.36 per cent, China’s Shanghai Composite add 0.26 per cent and Japan’s Nikkei tack on 1.33 per cent. Hong Kong’s Hang Seng dropped 0.12 per cent.

S&P 500 futures reversed to a gain of 10 points or 0.27 per cent.

Gold bounced US$8 or 0.46 per cent to US$1,744.50 an ounce.

The dollar climbed 0.55 per cent to 68.19 US cents.

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