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A holiday-shortened week looked primed to start with the share market at its highest level in five weeks following a record close on Wall Street.

ASX futures climbed 49 points or 0.7 per cent after tame inflation data and optimism over the recovery handed the S&P 500 its best return in three weeks. Oil, iron ore and metals rallied. The dollar climbed back above 76 US cents.

If Australian equities follow the lead from the futures market, the S&P/ASX 200 should start the session at a level last seen in mid-February before a spike in borrowing costs.

Wall Street

US stocks swept to fresh highs, thanks to a rush of late buying. The S&P 500 ended 65 points or 1.66 per cent head at a new closing high. Around a quarter of its gains came in the final minutes.

The Dow Jones Industrial Average also scored a record finish, rising 453 points or 1.39 per cent. The Nasdaq Composite was underwater late afternoon, but swung to a final tally of 161 points or 1.24 per cent.

The advances sealed weekly wins for the S&P 500 and Dow. The S&P 500 gained 1.6 per cent for the week. The Dow added 1.4 per cent. The Nasdaq trimmed its loss to 0.6 per cent.

The Dow and S&P returned to record territory as mild inflation data soothed concerns about rising borrowing costs. Data showed core inflation inched up 0.1 per cent last month. The annual increase was slightly lower than expected at 1.4 per cent.

Optimism over the vaccine rollout was boosted by an upgraded target from the White House. The Biden administration doubled its goal to 200 million Covid shots within the new president’s first 100 days in office. The US is currently delivering around three million shots per day.  

Lenders were boosted by a Federal Reserve ruling they can resume paying dividends at the end of June if they pass stress tests. Restrictions on dividends and share buybacks were introduced to ensure banks preserved enough capital to ride out the pandemic. Bank of America climbed 2.7 per cent and Wells Fargo 1.2 per cent.  

Energy stocks caught a lift from rising oil prices as attempts continued to clear a blockage in a key shipping route. Officials battled unsuccessfully to refloat a grounded container ship blocking the Suez Canal, a key link between the Middle East and Europe.   

“This now looks like it will take a few weeks,” Anoop Singh, head of tanker analysis at shipping broker Braemar ACM, told the Wall Street Journal.

Brent crude climbed $2.62 or 4.2 per cent to US$64.57 a barrel. The US benchmark climbed 4.1 per cent to US$60.97.

While Friday’s rally saw broad gains, value stocks continued to outpace growth sectors last week. The Russell 1000 Value Index has put on more than 10 per cent this year amid optimism over a recovering economy. The Russell 1000 Growth Index, which outperformed at the height of the pandemic, was flat for 2021.

Australian outlook

Energy, mining and tech look set to lead as the S&P/ASX 200 gets the week off to a positive start. All three sectors gained at least 2.5 per cent in the US. Real estate and health were close behind. The financial sector added 1.7 per cent.

Last week felt like a turning point, with the ASX slowly regaining its strength following a month in the sick ward. This week should show whether the patient is back on its feet. A strong start to this holiday-shortened week would go a long way to confirming the market has shaken off the bond market blues.

The first quarter of the calendar year ends on Wednesday. Quarter-ends can be unpredictable, with volatility increasing at the top end of the market as wealth managers rebalance portfolios to bring them back into line with fund allocations.

The four-day Easter weekend may also have an impact, with the potential for heightened caution and profit taking towards the end of the week. Wall Street takes Good Friday, but not Easter Monday, meaning the US will trade twice before the ASX reopens the following Tuesday.  

Another big week of dividend payments is coming up. Around $6.5 billion will hit accounts this week, according to CommSec. Notable names paying out include Commonwealth Bank, Wesfarmers, CSL, IAG and Suncorp.

Domestic economic data is light until the middle of the week. Wednesday brings building and credit data. The week ends on Thursday with manufacturing, trade and retail sales reports. Highlights on the international front include: US consumer confidence on Tuesday night; Chinese factory figures and US non-farm employment on Wednesday; and an OPEC meeting and US jobless claims on Thursday. The monthly US jobs report will be released during the Good Friday US market holiday.

The dollar mounted a partial recovery on Friday and was this morning ahead 0.07 per cent at 76.34 US cents.

Commodities

Revived optimism over the global recovery fuelled rebounds in industrial metals from down-pressure from European lockdowns. Benchmark copper on the London Metal Exchange climbed 2.1 per cent to US$8,967 a tonne. Aluminium improved 2.5 per cent, nickel 1.5 per cent, lead 1.7 per cent, zinc 2.2 per cent and tin 1.4 per cent.

Gold trimmed its first losing week in three. Gold for April delivery settled $7.20 or 0.4 per cent ahead at US$1,732.30 an ounce. The yellow metal shed 0.5 per cent for the week.

The big miners were lifted by demand hopes as the US vaccination rollout accelerated and the White House focuses on infrastructure spending. BHP’s US-listed stock gained 3.92 per cent and its UK-listed stock 3.34 per cent. Rio Tinto surged 3.98 per cent in the US and 3.44 per cent in the UK. The spot price for iron ore landed in China rose $1.25 or 0.8 per cent to US$161.45 a tonne.

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