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Aussie shares jumped almost 200 points as the local market chased two days of strong gains in the US.
The S&P/ASX 200 rallied 199.9 points in the opening minutes before paring its advance to 146 points or 2.4 per cent at mid-session. The rally lifted the benchmark index well clear of 6000 at the third attempt to its highest level since the first week of March.
Today’s gains mirrored a surge on Wall Street that began on Friday with a 2.6 per cent advance in the S&P 500 and continued overnight with a gain of 1.2 per cent after May jobs numbers came in significantly stronger than economists expected. Friday’s report showed the official unemployment rate eased to 13.3 per cent last month from 14.7 in April, defying expectations of a rise towards 20 per cent.
Big gains here in bank, energy and real estate stocks were partly offset by declines in healthcare, tech and gold stocks.
The financial sector lagged the broader market recovery until late last month, but made up significant ground this morning with a 4.6 per cent charge. CBA climbed 4.6 per cent to a 12-week high, ANZ 6 per cent, NAB 4.9 per cent and Westpac 5.4 per cent. Regional banks fared even better, Bank of Queensland rising 8.7 per cent and Bendigo Bank 7 per cent.
The financial sector also provided most of the index’s best performers: Credit Corp Group tacked on 15.8 per cent, Virgin Money UK 12.2 per cent and fund manager Challenger 10.5 per cent. Other standouts included Seven West Media +22.2 per cent, travel agent Flight Centre +12.7 per cent and casino group SkyCity Entertainment +11.6 per cent.
Oil companies welcomed a weekend OPEC decision to support oil prices by extending production caps to the end of next month. Santos soared 8.9 per cent, Oil Search 4.5 per cent and Woodside 4.6 per cent. Brent crude clawed back around a third of Friday’s losses, rising 42 cents or 1 per cent this morning to $US41.22 a barrel.
Shopping centre operators marched higher on the promise of a return to more profitable times as stores reopen and foot traffic picks up. Scentre Group gained 7.2 per cent, Vicinity Centres 4.5 per cent and Stockland 2.2 per cent.
Health giant CSL was among the biggest drags on the index, falling 2.3 per cent after announcing plans to acquire junior biotech Vitaeris, which is working on a solution to the rejection of kidneys in transplant patients. Gold miners Gold Road Resources and Evolution shed 9 per cent and 4.3 per cent, respectively, while tech companies Xero and Nextdc gave up 4.1 per cent and 3.9 per cent.
Business confidence and job advertising both improved last month, but remained significantly depressed. NAB’s confidence index climbed to -20 from -45 in April, while its measure of business conditions improved to -24 from -34. Both readings were well below long-term averages. A measure of job advertising ticked up 0.5 per cent but remained 59.8 per cent weaker than the same time last year. The dollar eased 0.33 per cent to 69.96 US cents.
Asian markets were mixed. China’s Shanghai Composite gained 0.2 per cent and Hong Kong’s Hang Seng 1 per cent. Japan’s Nikkei sank 0.6 per cent. S&P 500 index futures were recently down six points or 0.2 per cent.
Gold faded $3 or 0.2 per cent this morning to $US1,702.10 an ounce.
What’s hot today and what’s not:
Hot today: Artificial intelligence developer BrainChip (ASX:BRN) hit its highest level in 20 months on news the company is moving into the self-driving vehicle space. BrainChip announced it had signed a joint development agreement with European automotive supplier Valeo using BrainChip’s Akida System-on-Chip in advanced driver assistance systems and autonomous vehicles. The aim is to combine BRN’s processing power with Valeo’s sensors. The BRN share price shot up 36.4 per cent to 12 cents, a level last seen in October 2018.
Not today: Shares in Torian Resources (ASX:TNR) slumped after initial drill results from its Mt Stirling project fell short of over-inflated expectations. While the company said it was excited by the results, the share price tanked 15.8 per cent to 3.2 cents. Despite the fall, today’s share price still offered a tidy profit for those smart enough to pick up stock below half a cent in March. Chairman Louie Simens said the next step would be an aggressive phase 2 drill program to “unlock what’s turning out to be a major system”.
