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The share market rose as the heavily-weighted financial sector bounced off an eight-week low and China-reopening optimism lifted miners for a fourth session.  

The S&P/ASX 200 rallied 26 points or 0.35 per cent by the halfway mark.

Tech and mining stocks led the advance, supported by Telstra, CSL and the supermarkets. Utilities and property stocks trailled.  

What’s driving the market

Market sentiment has improved this week, but likely not by enough to avert a fourth straight weekly loss. Three gains over the last four sessions have not been enough to turn around an 82-point dive on Monday after a rebound in inflation torpedoed Wall Street late last week. At mid-session, the ASX 200 was on track for a weekly deficit of 26 points or 0.35 per cent.   

Domestic sentiment was boosted mid-week by a triple dose of market-friendly developments. Reports showed inflation cooled more than expected in January, economic growth softened enough in the December quarter for the Reserve Bank to reassess the outlook for interest rates, and the Chinese economy gathered strength this month after the pandemic slowdown.  

US stocks steadied overnight as investors welcomed calls from a Federal Reserve policymaker for “slow and steady” rates policy. Atlanta Fed President Raphael Bostic pushed back against calls from other Fed officials for a 50 bps rate hike this month. The S&P 500 advanced 0.76 per cent.

The ASX 200 has given back more than half of its 2023 gains this month. How the market fares from here will depend very much on inflation and interest rates, according to Kunal Sawhney, CEO of research group Kalkine.

“What matters the most right now and over the medium term is whether inflation will prove stickier or subside in the coming months due to persistently high borrowing rates,” Sawhney said.

“Aussie stocks, especially mining, have a tendency to react positively to favourable industrial activity news from China. Earlier this year, when China lifted all Covid control measures, shares zoomed, but February was again impacted by what matters the most – RBA and Fed’s policy rate stance. Things are expected to become a little predictable only after the Fed’s March rate announcement.”

Going up

Several of the big four banks edged off their lowest levels since October. The financial sector slumped yesterday after soft housing approvals implied there will be fewer mortgages to drive profits in coming months.

Commonwealth Bank bounced 0.46 per cent. NAB gained 0.68 per cent. Westpac inched up 0.42 per cent. ANZ rallied 0.97 per cent from an eight-week low.

The major miners rose for a fourth day as iron ore prices lifted again in China. The most-traded ore contract on the Dalian Commodity Exchange firmed 0.65 per cent this morning, adding to yesterday’s 1.56 per cent rise.

Rio Tinto advanced 1.55 per cent. BHP tacked on 0.58 per cent. Lithium, coal and some gold miners also made headway. Liontown Resources jumped 6.94 per cent, Ramelius 4.57 per cent and New Hope 1.93 per cent.

OZ Minerals inched up 0.07 per cent after an independent expert concluded a $9.6 billion takeover offer from BHP was fair and reasonable. Grant Samuel said the offer of $28.25 per share was in the best interests of shareholders in the absence of a superior proposal. Oz directors have unanimously recommended the offer.

Nickel Industries advanced 0.48 per cent to $1.04 after raising $34.6 million from shareholders at $1.02 per share.

Norwest Energy firmed 7.81 per cent after Mineral Resources extended its takeover offer for the firm, declaring the deal on the table “best and final”. Mineral Resources said it held voting power for approximately 70 per cent of Norwest shares. MinRes shares lifted 0.86 per cent.  

Afterpay owner Block was the pick of the tech stocks, rising 3.59 per cent. WiseTech added 1.95 per cent, Megaport 2.29 per cent and Altium 0.83 per cent.

Going down

Downer EDI slid 0.3 per cent after the sudden resignation of Chair Mark Chellew. The chairman’s departure follows the exit of Chief Financial Officer Michael Ferguson earlier this week. The engineering group’s shares have fallen heavily this year following an accounting scandal and two downgrades to its full-year profit forecast.  

Dividend payments continued to sap the market. Ampol shed 5.83 per cent as it traded ex-dividend. Nine Entertainment lost 1.96 per cent. Treasury Wine Estates shed 1.85 per cent.

Other notable falls this morning included Capricorn Metals -3.72 per cent, Silver Lake Resources -3.27 per cent and Centuria Capital -3.11 per cent.

Other markets

A strong morning on Asian markets saw the Asia Dow gain 1.25 per cent, China’s Shanghai Composite 0.14 per cent, Hong Kong’s Hang Seng 1.29 per cent and Japan’s Nikkei 1.24 per cent.

US futures faded after Federal Reserve Governor Christopher Waller said recent data showed the central bank had not made as much progress on cooling inflation as it previously thought. S&P 500 futures declined seven points or 0.18 per cent.

Brent crude gave back last night’s 44 US cent rally, falling 44 US cents or 0.5 per cent to US$84.31 a barrel.

Gold reversed most of last night’s US$4.90 drop, rising US$4.10 or 0.2 per cent to US$1,844.60 an ounce.

The dollar bounced 0.17 per cent to 67.43 US cents.

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