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Takeover interest and positive overseas leads helped settle share market jitters after yesterday’s bumper interest rate rise.

The S&P/ASX 200 bounced 50 points or 0.71 per cent by mid-session. The rally reversed almost half of yesterday’s loss, which came after the Reserve Bank hiked the cash rate target by 50 basis points.

Ten of eleven sectors rallied. Toll road operator Atlas Arteria surged after investment firm IFM secured a 15 per cent stake overnight with a view to a takeover. The banks retreated amid concerns about a surge in bad debts as rates rise.

What’s driving the market

A broad rally saw the industrial, utilities, technology, materials and energy sectors all rise more than 2 per cent following a positive session on Wall Street.

“Iron ore miners were seen to be driving gains in the market this morning amidst rising iron ore prices, which is pointing towards a favourable earnings outlook for such companies. On the flip side, banking stocks continued to remain under pressure, limiting gains in the benchmark index,” Kunal Sawhney, CEO of research group Kalkine, said.

The S&P 500 climbed 0.95 per cent overnight as a retreat in long-term borrowing costs encouraged traders to buy an early dip.

“While a drop in Treasury yields benefitted tech stocks, energy producers got a boost from higher crude oil prices. The Brent crude rose to the US$120 per barrel mark and could stay higher for the remaining of the year amidst current market dynamics,” Sawhney said.

Value investors were encouraged by an overnight raid on the nation’s second-largest toll road operator. Atlas Arteria jumped 16.06 per cent to $8.24 after IFM Global Infrastructure Fund acquired a 15 per cent interest in the firm at $8.10.

“IFM has indicated that it intends to request from Atlas Arteria access to certain limited company information to assess whether it can submit a non-binding indicative proposal to Atlas Arteria to acquire all of the Atlas Arteria securities it does not already own,” the toll road operator said.

Atlas said no request had been received yet and there was no guarantee an acquisition proposal would follow. Rival Transurban jumped 3.5 per cent.

The financial sector was the only one to decline amid concerns an aggressive series of rate increases will trigger a wave of defaults among borrowers. Westpac slumped 4.85 per cent. CBA shed 3.35 per cent, NAB 3.02 per cent and ANZ 2.15 per cent. Bendigo Bank sagged 6.15 per cent.

Westpac predicts the central bank will raise the cash rate target by another 50 basis points next month as central banks around the world scramble to suppress runaway inflation.

“The Bank now recognises that it has a significant challenge to contain inflation and [yesterday’s] decision points to it now being prepared to act decisively,” chief economist Bill Evans said. “For that reason, we expect that the next move in July will also be a 50 basis point increase.”

Evans expects the bank to revert to 25 basis point increases thereon. He predicts rates will peak in February at 2.35 per cent.

NAB forecast 50 basis point increases at the next two meetings, taking the cash rate to 1.85 per cent by August.

Going up

BHP climbed 3.17 per cent to its highest since August as iron ore prices continued to recover with easing Covid restrictions in China. Rio Tinto firmed 2.73 per cent, Fortescue Metals 1.89 per cent and Champion Iron 3.17 per cent.

A three-month high in US crude helped fire Woodside Energy up 3.1 per cent towards its March peak. Santos bounced 3.36 per cent. Beach Energy advanced 2.17 per cent to a 16-month high.

Boral soared 14.69 per cent on news former Cleanaway chief Vik Bansal will join the building materials manufacturer as CEO and Managing Director.

Scrap metal recycler Sims firmed 0.72 per cent after outlining full-year guidance. The company expects underlying earnings in the range of $750-$770 million, subject to year-end shipping dates.

Uranium miners surged on White House plans to reduce the US’s dependence on imported Russian uranium. Paladin Energy jumped 13.48 per cent, Peninsula Energy 17.14 per cent and 92 Energy 18.87 per cent.

At the junior end of the market, positive drilling results saw Rimfire Pacific briefly double in value. Aircore drilling at the miner’s Currajong prospect in central NSW intersected “significant anomalous nickel-cobalt mineralisation”. The share price flew from nine-tenths of a cent to 2.3 cents before paring its advance to 88.89 per cent at 1.7 cents.

Going down

Buy now, pay later providers were mixed in the wake of Apple’s launch of its own instalment payment system within Apple Pay. Zip Co fell another 3.82 per cent to a fresh five-year low. Sezzle slumped 13.04 per cent. Humm dropped 1.91 per cent. Afterpay parent Block bounced 3.68 per cent. Splitit rallied 2.27 per cent.

Consumer stocks also traded mixed as investors assessed likely winners and losers from yesterday’s rate hike. City Chic Collective dropped 2.84 per cent, Domino’s Pizza 1.96 per cent, Harvey Norman 1.17 per cent and IGA operator Metcash 0.97 per cent.

A profit warning cost the owner of high-street clothing brands Noni B, Rivers and Katies more than a third of its market value. Mosaic Brands said a weak second half would seal a full-year loss after trading conditions failed to improve as much as expected.

The share price tumbled 43.33 per cent. The group expects to return to profitability in FY23.

Other markets

Asian markets rose in unison. The Asia Dow advanced 1.03 per cent. China’s Shanghai Composite gained 0.41 per cent, Hong Kong’s Hang Seng 1.88 per cent and Japan’s Nikkei 1 per cent.

US futures hovered near break-even. S&P 500 futures eased three points or 0.08 per cent.

Oil added to overnight gains. Brent crude climbed 18 US cents or 0.15 per cent to US$120.75 a barrel.

Gold dipped 30 US cents or 0.1 per cent to US$1,851.80 an ounce.

The dollar edged up 0.08 per cent to 72.27 US cents.

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