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Australian shares pushed towards a second straight winning week after Wall Street logged its biggest advance since March.

The S&P/ASX 200 reached mid-session 45 points or 0.6 per cent ahead after earlier climbing 61 points to its highest in two and a half weeks.

The market came off its peak as the dollar rallied. The fade left the index with a weekly gain of 36 points.

Shares in Macquarie Group hit an all-time high. BHP rose more than 1.5 per cent after investors backed the miner’s climate action plan.

What’s driving the market

A positive start to a new corporate earnings season lifted the S&P 500 1.71 per cent overnight, its best return in seven months. Investors increased their exposure after all eight of the S&P 500 companies that reported beat earnings expectations.

“Investors cheered better-than-expected third-quarter earnings of big banks, including Citigroup, Bank of America, Wells Fargo, and Morgan Stanley,” Kalkine Group CEO Kunal Sawhney said.

“Solid bank earnings have revived hopes of a robust earnings season similar to the second quarter. Having said that, it remains to be seen if the other US companies have also won the battle against labour shortages, rising costs and supply chain disruptions in the September quarter.”

Mining stocks were a standout on both sides of the Pacific following strong gains overnight in industrial metals. BHP, OZ Minerals and Fortescue Metals were among the morning’s best performers. Rio Tinto was held back by a production downgrade.

“Base metals rallied sharply as the prospect of further supply disruptions from the energy shortages increased. Aluminium, one of the most energy intensive metals, hit its highest level since 2008, while copper briefly traded above USD10,000/t,” ANZ senior commodity strategist Daniel Hynes said.

“However, zinc led the gains following news earlier in the week that Nystar would cut output at its European smelters by 50% due to surging power prices and costs associated with carbon emissions.”

The dollar benefitted from its global position as a “commodity currency”, rising above 74 US cents for the first time in a month. The Aussie was last ahead 0.13 per cent at 74.23 US cents.

Going up

BHP climbed 1.72 per cent after shareholders backed the miner’s climate plan. A vote at last night’s annual general meeting in London was 83 per cent in favour of the Climate Transition Action Plan to reduce emissions by at least 30 per cent by 2030.

OZ Minerals put on 3.72 per cent, Chalice Mining 2.99 per cent and Fortescue Metals 0.8 per cent.

Tech was the session’s other standout as borrowing costs continued to retreat. Appen gained 3.65 per cent, Nanosonics 3.2 per cent and NextDC 2.66 per cent.    

Travel and tourism companies rose after New South Wales scrapped compulsory quarantine measures for fully-vaccinated travellers. Flight Centre added 5.01 per cent, Webjet 4.53 per cent and Corporate Travel Management 3.64 per cent.

Qantas soared 3.41 per cent after securing $802 million for surplus land at Mascot in Sydney. The funds will be used to reduce debt and aid the airline’s pandemic recovery.

Macquarie Group steered the financial sector higher, charging 3.25 per cent to a new high. The rally helped offset declines of 0.17 per cent in Commonwealth Bank and 0.18 per cent in NAB. ANZ put on 0.4 per cent and Westpac 0.12 per cent.

Other heavyweight advances included Telstra +0.26 per cent, CSL 0.18 per cent and Woodside +1.24 per cent.

Going down

A production downgrade pulled Rio Tinto down 1.13 per cent. The miner lowered its Pilbara full-year iron ore shipment guidance to 320-325 million tonnes from 325-340 million tonnes. Production was impacted by delays in completing a new greenfield mine and a brownfield replacement project amid a tight labour market.

Treasury Wine Estates declined 5.21 per cent after warning business was taking longer to recover from the pandemic than the company originally expected. While retail and e-commerce channels remained strong, luxury channels continued to be impacted. The company told today’s AGM it was also experiencing logistical and supply chain issues, including shipping delays.

IAG slipped 2.95 per cent after the corporate regulator launched civil proceedings alleging the insurer failed to pass on discounts to customers. The proceedings relate to home, motor, caravan and boat insurance sold between 2014 and 2019 and affect approximately 596,000 customers. IAG self-reported the issue to the Australian Securities and Investments Commission (ASIC) and is working on remediation.  

Pendal Group sank 10.74 per cent after reporting net outflows of $2.3 billion in funds under management last quarter. CEO Nick Good said there was “significant volatility” in client sentiment during the quarter.

A ratings downgrade from Bell Potter dragged Elders down 5.84 per cent. Harvey Norman dropped 3.15 per cent as it went ex-dividend.

Other markets

A broadly positive session on Asian markets saw the Asia Dow advance 0.58 per cent, Hong Kong’s Hang Seng 0.9 per cent and Japan’s Nikkei 0.8 per cent. China’s Shanghai Composite eased 0.18 per cent. US futures were flat.

Oil extended overnight gains. Brent crude tacked on 40 US cents or 0.5 per cent at US$84.40 a barrel.

Gold retreated US$1.10 or 0.06 per cent to US$1,796.80 an ounce.

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