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A positive week for Australian investors got back on track as iron ore rebounded after Wall Street rose for a third night.

The S&P/ASX 200 rallied 25 points or 0.37 per cent towards its third gain from four sessions. Today’s advance extended the benchmark’s tally for the week to around 80 points or 1.2 per cent.

Bulk metal miners were boosted by a recovery in iron ore this morning. Tech stocks, gold miners and industrials declined.

What’s driving the market

Dip-buyers took advantage of this week’s commodities slump. Materials was the morning’s best-performing sector, bouncing 1.6 per cent off yesterday’s eight-month low.

Buyers appeared to be betting on commodity prices finding a bottom after heavy selling through the first half of the week. Iron ore bounced 4.05 per cent in China this morning. Gold inched higher after falling for seven sessions, its worst run in more than three years. Overnight, copper trimmed a 5 per cent dive to a closing loss of 2 per cent.

This week’s collapse in prices came as investors reassessed the demand implications of a global economic slowdown. “Soft commodities” such as wheat, corn and soybeans also declined amid weak demand signals.

“The USDA’s weekly export inspection data shows that demand for US grains softened further over the last week. US weekly inspections of corn for export dropped sharply to just 677kt over the last week, compared to around 1.25mt a week ago. Similarly, demand for US wheat also dropped sharply, with wheat shipment inspections falling to a 5-yr low of 112kt over the last week,” ING’s head of commodities strategy, Warren Patterson, said.

ASX buying interest has been sustained by a modest but steady improvement this week on Wall Street. The S&P 500 firmed 0.36 per cent overnight after the Federal Reserve appeared to open the door to a smaller rate increase this month than the market anticipated.

The S&P 500’s three-session winning run is the longest since May, sharpening hopes this year’s bear market may be easing.

“Everybody is both emotionally and sort of market level exhausted,” Alli McCartney, managing director at UBS Private Wealth Management, told CNBC. “So, I think we still have a summer of watching for what the Fed does, watching for what happens in international policy, watching for the directionality of CPI [consumer price inflation].”

Going up

The mining heavyweights bounced with iron ore prices after dragging the market to a loss yesterday. Rio Tinto rallied 3.04 per cent. Fortescue Metals firmed 3.03 per cent. BHP gained 1.88 per cent.

A nickel-copper strike at the Dampier Target north-east of Perth boosted Chalice Mining 9.73 per cent. Initial diamond drill testing 10km from the miner’s Gonneville Deposit generated “exciting early visual results”.  

Other miners to rebound included South32 +4.67 per cent, Minerals Resources +4.03 per cent and Nickel Industries +2.76 per cent.

The major supermarkets were among the best of the majors for a second session. Woolworths climbed 1.07 per cent to a seven-week high. Coles put on 0.22 per cent.

Link Administration firmed 6.27 per cent after suitor Dye & Durham raised its takeover offer. A week and a half after cutting its offer from $5.50 per share to $4.30, the Canadian software firm came back with a revised bid of $4.57. Link said it would consider the revised offer.

Investment manager Pinnacle gained 8.88 per cent on news of strong second half improvement in performance fees. The firm will take in $16.4 million in performance fees for the full year, thanks to a $10 million surge in the second half.

Bendigo Bank was unchanged after acquiring ANZ’s $715 million investment lending portfolio for a little over book value. Bendigo said the premium to be paid was “immaterial” and the acquisition would be funded through ordinary business operations.

Going down

The ASX gold index slumped to its lowest since October 2018 after the precious metal’s losing run extended into a seventh session overnight. The yellow metal is the most prominent victim of a rally that has lifted the US dollar index to a 20-year high. A stronger dollar raises the cost of dollar-denominated commodities for holders of other currencies and dulls interest in hedges.

Gold Road Resources dropped 3.83 per cent, De Grey 3.07 per cent and Silver Lake Resources 2.16 per cent. Newcrest swung late morning to a gain of 0.31 per cent.

Profit-takers took advantage of yesterday’s strong rally in payment companies. EML dropped 9.15 per cent, Zip Co 5.22 per cent and Block 2.23 per cent.

Bubs Australia fell 8.61 per cent towards this week’s capital raising price. The infant formula manufacturer will supply two additional flights to the US to help with a nationwide formula shortage.

Inclusion in the US Russell 2000 index of small caps failed to arrest a slide in Piedmont Lithium. Shares in the out-of-favour miner declined 1.9 per cent to an 18-month low.

Other markets

A mixed session on Asian markets saw the Asia Dow rise 0.84 per cent, China’s Shanghai Composite add 0.1 per cent and Japan’s Nikkei tack on 0.85 per cent. Hong Kong’s Hang Seng dropped 0.86 per cent.

S&P 500 futures dipped three points or 0.1 per cent.

Oil extended overnight weakness. Brent crude declined 98 US cents or 1 per cent to US$99.71 a barrel.

Gold bounced US$2.80 or 0.16 per cent to US$1,739.40 an ounce.

The dollar climbed 0.32 per cent to 68.03 US cents.

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