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Aussie shares punched to a 16-week high as the local market played catch-up with seasonal gains in the US.

The S&P/ASX 200 rallied 76 points or 1.02 per cent by mid-session. The Australian benchmark cracked 7500 for the first time since September 9, rising as high as 7507.7 before easing to 7495.

All 11 sectors advanced. Woodside Petroleum, Woolworths and Wesfarmers were the pick of the heavyweights. Lithium miners continued to outperform.

What’s driving the market

A global “Santa rally” that began last week resumed on Wall Street on Monday while Australians were still enjoying the Christmas break. Local investors turned on their screens this morning to find the S&P 500 just off record levels following back-to-back intraday highs through the start of the week.

The broadest of the US benchmarks logged its 69th record close of the year on Monday, then eased 0.1 per cent overnight. Optimism about the economic outlook helped lift the Dow 0.26 per cent to a fifth straight gain. Brent crude also rose for a fifth session.

“In Australia, the share market seems to be moving in line with the usual Santa Claus rally,” Kalkine Group CEO Kunal Sawhney said. “The market is seen to be catching up with gains in New York as investors shrug off Omicron concerns.

“It remains to be seen if the Australian share market will be able to retain the positive momentum in this holiday-shortened week amid looming concerns around rising virus cases, coronavirus testing delays and lab errors.”

Selling resistance has dwindled during a seasonal downturn in trading volumes. At 279 million shares traded, Friday’s holiday-shortened session saw the lightest trade of the year.

“Trading volumes are expected to remain low this week as many investors continue to be in a holiday mood ahead of the new year,” Sawhney said . “The thin trading volumes could result in higher volatility during the last few days of December, prompting sharp market movements.

“The Christmas holidays are usually considered to be a great time for investors and traders to put their heads down and make some extra income to offset holiday and other expenses.”

Financial markets continue to bet the emergence of the reportedly-milder omicron Covid variant will provide a stepping stone towards ending the pandemic. A South African study released overnight suggested infection with omicron provided some protection against the more severe delta strain.  

Travel and tourism stocks traded mixed but little changed despite Covid cases almost doubling in 24 hours in New South Wales. The state reported 11,201 new cases this morning, up from 6,062 cases on Tuesday. Victoria, Queensland and Tasmania also reported records.

Corporate Travel Management fell 1.05 per cent and Webjet 0.57 per cent. Qantas rallied 1.21 per cent, Helloworld 1.02 per cent and Flight Centre 0.45 per cent.

Covid testers scaled fresh heights. Sonic Healthcare advanced 0.86 per cent, Healius 1.49 per cent and Australian Clinical Labs 0.33 per cent.

Going up

Lithium miners spearheaded gains as investors bet on strong demand next year for “white gold” used in batteries and electric cars. Pilbara Minerals surged 4.73 per cent to an all-time high. Shares that traded at 13 cents last year hit $3.14 this morning.

Liontown Resources rose 8.77 per cent. Allkem (formerly Orocobre) put on 4.87 per cent. GrainCorp rose 3.63 per cent to a fresh high following record grain receivals.

Woodside Petroleum firmed 2.75 per cent after Brent crude booked a fifth straight advance. Santos gained 1.64 per cent and Beach Energy 4.1 per cent.

CBA climbed 1 per cent to a six-week peak. ANZ added 1.13 per cent, NAB 0.73 per cent and Westpac 1.37 per cent. Woolworths tacked on 1.91 per cent, Wesfarmers 1.64 per cent and Fortescue Metals 1.46 per cent.

A three-year deal with Singtel lifted software-as-a-service provider Whispir 5.76 per cent. The contract to supply internal notification systems to the Singapore telco’s staff is worth a minimum $1.33 million.

The morning’s best performer was explorer Carnaby Resources. The copper-gold hopeful surged 80.95 per cent after announcing a “major discovery” at its Greater Duchess project at Mount Isa in Queensland. The company’s shares have more than tripled from 29 cents to a high of $1.39 this morning since it began reporting results from the Nil Desperandum Prospect.   

Syrah Resources rallied 3.68 per cent after providing more detail on last week’s announcement of an offtake agreement with Elon Musk’s Tesla. Conditions attached to the graphite supply deal include both parties agreeing on final specifications for supply by the end of next year and Syrah commencing production by May 31, 2024. The miner plans to make a final investment decision on the Vidalia mine in the US next month.

Going down

Afterpay was the only heavyweight to resist the rising tide, falling 2.47 per cent. The BNPL leader’s share price is tied to that of prospective US acquirer Block (formerly Square), whose shares declined 2.85 per cent overnight as part of a broad retreat from high-growth US stocks.

The morning’s other major falls were uranium miner Paladin -2.63 per cent, casino group SkyCity -1.52 per cent, investment manager AMP -1.5 per cent and biotech Clinuvel -1.47 per cent.

Other markets

US futures continued to nudge higher. S&P 500 futures advanced three points or 0.06 per cent. Nasdaq futures bounced 37 points or 0.22 per cent.

A red morning on Asian markets saw the Asia Dow fall 0.45 per cent, China’s Shanghai Composite 0.32 per cent, Hong Kong’s Hang Seng 0.76 per cent and Japan’s Nikkei 0.8 per cent.

Oil pushed for a sixth gain. Brent crude firmed nine US cents or 0.11 per cent to US$78.76 a barrel.

Gold declined US$4.80 or 0.27 per cent to US$1,806.10 an ounce.

The dollar faded 0.18 per cent to 72.19 US cents.

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