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Shares rose for the seventh time in eight sessions as traders continued to reposition for a post-Covid economic recovery.

The S&P/ASX 200 climbed 98 points or almost 1.6 per cent to 6439 by mid-session, edging past yesterday’s eight-month intraday high. The index was on track for its highest finish since the first week of the February-March pandemic sell-off.

What’s driving the market

Value stocks that underperformed during the pandemic steered the Dow Jones Industrial Average to a gain of 263 points or 0.9 per cent overnight. Gains in the likes of Boeing and Chevron overshadowed a soft session for Big Tech as fund managers prepared for life after Covid. The Nasdaq Composite shed 1.37 per cent.

“A rotation theme remains evident in equity markets,” NAB currency strategist Rodrigo Catril said. “Yesterday’s great vaccines news from Pfizer and BioNTech has triggered a reassessment of the outlook for next year. Big tech which has benefited from our virus driven change in behaviour (working from home a primary example) is now falling out of favour while small cap stocks and those that have been most affected by social distancing restrictions have outperformed.”

Similar themes played out here. Shopping centre operators, oil companies, casinos and travel stocks rose for a second session. Online retailers and defensive gold stocks declined. Analysts at Macquarie Group and Morgans cut their ratings on the likes of Domino’s Pizza, Super Retail Group and JB Hi-Fi, citing a shift in market sentiment following yesterday’s vaccine news.

The reopening of Victoria helped raise consumer confidence to its highest level in seven years. Westpac’s consumer sentiment index improved 2.5 per cent this month to 107.7. The rise was the index’s third in a row.

“This is another strong result”, Westpac Chief Economist Bill Evans said. “The most important developments since last month have been the significant unwinding of restrictions across Victoria and the reopening of the Victoria-NSW border.”

Going up

All 11 sectors rose. Gains ranged from 0.2 per cent for consumer discretionary to 3.7 per cent for energy.

Energy has been the week’s big winner, rising more than 10 per cent in two sessions in expectation oil prices will rise to reflect growing demand as the global economy recovers. Santos gained 4.8 per cent, Oil Search 4.5 per cent and Beach Energy 4.2 per cent.

Woodside Petroleum climbed 4.8 per cent to its highest level since late August. CEO Peter Coleman told shareholders the Scarborough gas resource in north-west WA had the potential to be a “game-changer”. The company anticipates net cashflow of around $35 billion over the life of the field.

Commonwealth Bank rose 2 per cent after insisting it was well positioned to ride out the pandemic. The bank said growth in home and business lending and deposits last quarter helped offset margin pressure from record-low interest rates. The unaudited cash profit for the quarter shrank 16 per cent to $1.8 billion from the same period last year. ANZ advanced 1.8 per cent and NAB 2.3 per cent. Westpac eased less than 0.1 per cent as it traded without its dividend. UK banking group Virgin Money soared 13.8 per cent.

At the top end of the market, property group Goodman rebounded 4.6 per cent. Toll road operator Transurban gained 4.1 per cent, miner BHP 1.9 per cent, miner Rio Tinto 1.5 per cent and biotech CSL 1.4 per cent.

Financial registry Computershare moved 3.2 per cent to an eight-month high after reporting it had tracked better than expected over the first four months of the financial year. News of a 1.8 per cent rise in half-year revenues helped lift energy infrastructure giant AusNet Services 5.1 per cent.

Going down

Gold stocks dragged for a second day despite a partial rebound in precious metals overnight. Newcrest slid 1.3 per cent as it held its annual general meeting. Ramelius Resources shed 5.3 per cent, Northern Star 2.7 per cent and Evolution Mining 2.7 per cent.

Online retail remained under pressure following yesterday’s brutal session. JB Hi-Fi shed 4.8 per cent, Lovisa Holdings 3.8 per cent, 3.5 per cent and Domino’s Pizza 2.1 per cent.

Iron ore miner Fortescue Metals faded 1.4 per cent and retail conglomerate Wesfarmers 0.3 per cent.

Other markets

US index futures drifted lower. S&P 500 index futures were recently down four points or 0.1 per cent.

A mixed morning in Asia saw China’s Shanghai Composite fall 0.2 per cent, Hong Kong’s Hang Seng trade unchanged and Japan’s Nikkei rise 1.1 per cent.

Oil continued to build on this week’s bull run. Brent crude rose 32 cents or 0.8 per cent to $US41.68 a barrel. Gold edged up $2.70 or 0.1 per cent to $US1,879.10 an ounce.

The dollar advanced 0.1 per cent to 72.89 US cents.

What’s hot today and what’s not

Hot today: Among the morning’s best performers was digital services business RXP Services (ASX:RXP) following a friendly takeover offer from French multinational Capgemini. Shares in the Australian outfit jumped 51.5 per cent to 51.5 cents after Capgemini offered 55 cents per share under a scheme of arrangement supported by RXP’s board. CEO Ross Fielding said, “I am very excited by the growth opportunities this will create for our ~550 employees within a global and culturally aligned business.”

Not today: High expectations for Resource & Energy Group‘s (ASX:REZ) Gigante Grande project in WA were apparently not met by the latest drill results. Shares in the company more than tripled last month when the company announced high-grade gold at the East Menzies project. Almost a third of those gains dissipated this morning after the company reported the results of step out drilling. Shares sagged 30.5 per cent to 7.3 cents.    

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