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Australian shares rose for a seventh session, supported by progress in Russia-Ukraine ceasefire negotiations, positive US leads and a government cash splash.
The S&P/ASX 200 rallied 61 points or 0.82 per cent by mid-session. The rally lifted the benchmark above 7500 for the first time since the opening week of the year.
Tech stocks led for a second day, supported by gains in healthcare, property and banking. Energy producers and miners retreated with crude, gold and most industrial metals.
What’s driving the market
A global rally continued overnight after Russia pledged to “drastically” reduce attacks on Kyiv and another northern city. The offer sharpened hopes the two sides were narrowing their differences as peace talks resumed after a two-week break.
European and US markets responded with strong gains. The pan-European Stoxx 600 jumped 1.74 per cent. In the US, the S&P 500 put on 1.23 per cent and the Nasdaq Composite 1.84 per cent.
Investor sentiment was further boosted by declines in commodity prices. Crude oil dropped briefly below US$100 a barrel in the US. Wheat, nickel, aluminium and other metals declined.
“The prospects of a de-escalation in the Ukraine war saw fears of supply disruptions in commodity markets ease. Energy led the complex lower, while metals were also down,” ANZ senior commodity strategist Daniel Hynes said.
Growth stocks outperformed for a second day as risk appetite continued to heal, borrowing costs backed off multi-year highs and investors looked for winners from last night’s Federal Budget.
“The government has unveiled its giveaway budget full of spending and investments ahead of the general election,” Kunal Sawhney, chief executive of research group Kalkine, said.
“In line with the market expectations, there are plenty of winners in the pre-election budget, including motorists, taxpayers, women, low-income earners, defense, infrastructure, small businesses, first-home buyers, apprentices, parents, tourism operators and aged care workers.
“The budget carried a range of significant measures, including a cut to fuel excise, massive investment for rail and road projects and new spending for a cyberwarfare and defense initiative.”
The tech sector hit a ten-week high on positive leads from the Nasdaq and budget measures to encourage digital investment. Last night’s budget offered small and medium businesses a tax incentive to invest in digital skills, technology and security.
Potential winners from the measure to rally this morning included Xero +4.85 per cent, Megaport +5.38 per cent and NextDC +2.88 per cent. Other tech stocks to fire included Afterpay parent Block +6.89 per cent, Life360 +14.07 per cent and EML Payments +4.15 per cent.
Going up
Property giant Charter Hall Group climbed 2.35 per cent after striking a deal to acquire asset manager Irongate in partnership with a Dutch pension fund. The partnership will pay Irongate shareholders $1.90 cash per stapled security.
Blue-chips to advance included Goodman Group +3.47 per cent, CSL +2.02 per cent, Macquarie Group +2.29 per cent and Wesfarmers +1.29 per cent.
The high-street banks put on between 0.32 and 1.07 per cent. NAB’s 1.06 per cent rise was enough to secure a four-and-a-half year high.
Eagers Automotive shareholders welcomed news the group will acquire a portfolio of car dealerships in the ACT. The company will pay $205 million for WFM Motors. The Eagers share price climbed 2.91 per cent.
A sharp rebound in Magellan extended into a second day. The battered fund manager gained 8.19 per cent.
Telstra edged up 0.17 per cent after CEO Andy Penn announced plans to stand down after seven years at the helm. Chief Financial Officer Vicki Brady will take over as CEO on September 1.
A week of extreme responses to positive drillings results continued as Culpeo Minerals briefly joined the “tripled-in-a-day” club. Shares in the South America-focussed copper explorer ran from 12.5 cents yesterday as high as 45 cents today on news the first hole of a drilling program intersected visible sulphide copper. The share price was last up 156 per cent at 31.5 cents.
Going down
Mining stocks retreated as some of the “war premium” came out of commodity prices. South32 fell 3.88 per cent, Whitehaven Coal 3.76 per cent and IGO 2.64 per cent.
At the heavyweight end, BHP dipped 0.22 per cent, Santos 1.33 per cent, Woodside 1.1 per cent and Rio Tinto 0.21 per cent.
Casino group Star Entertainment declined 0.92 per cent after acknowledging receipt of a class action filed by Slater & Gordon. The claim alleges Star failed to meet its continuous disclosure obligations and engaged in misleading conduct. Star said it would defend the proceedings.
88 Energy lost more than half of its market value following disappointing drilling results in Alaska. Wireline logging indicated the Merlin-2 well did not warrant a production test. Shares that traded as high as 9.7 cents last April hit 1.3 cents this morning before paring their fall to 51.52 per cent.
Other markets
A broadly positive morning on Asian markets saw the Asia Dow improve 0.33 per cent. China’s Shanghai Composite 0.67 per cent and Hong Kong’s Hang Seng 1.18 per cent. Japan’s Nikkei dropped 0.81 per cent.
US futures were little changed. S&P 500 futures eased two points or 0.04 per cent.
Oil reversed a portion of last night’s 2 per cent decline. Brent crude rose 65 US cents or 0.6 per cent to US$110.88 a barrel.
Gold rebounded US$8.30 or 0.43 per cent to US$1,920.50 an ounce.
The dollar eased 0.08 per cent to 75.08 US cents.
