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A second day of gains lifted the share market to its highest level in more than a week following Wall Street’s best night in nine months.
The S&P/ASX 200 rose as much as 71 points before paring its gain to 24 points or 0.36 per cent as the market’s bullish start to March continued. Today’s advance extended the index’s two-day gain to 140 points or 2.1 per cent.
What’s driving the market
Tech stocks spearheaded a broad rally that initially lifted every sector except energy. The big banks and miners added bulk to the move. REITs joined energy in the red as the morning wore on.
The market pared its gains as a rise in the US dollar dented commodity prices. Also weighing on the local currency: news of a sharp decline in building approvals in January. The Aussie dipped 0.18 per cent to 77.56 US cents.
Speculative stocks outpaced the wider market, a sign of improved risk appetite. The S&P/ASX Emerging Companies Index bounced 0.8 per cent from yesterday’s one-month low.
Global equity markets have regained their footing this week as investors grow more comfortable with a rise in borrowing rates. Overnight, the S&P 500 surged 2.38 per cent, its biggest advance since last June. The Nasdaq Composite bounced 3 per cent, reversing much of the 4.9 per cent it shed last week as debt-dependent growth stocks plunged.
Australian stocks rebounded sharply yesterday after the Reserve Bank waded into the bond market, helping to pull yields down by 32 basis points. Overnight, US yields steadied nearer 1.4 per cent than the 1.6 per cent they hit last week.
“With the US Federal Reserve content to frame the rise in US Treasury yields as a pleasing echo of rising economic optimism, bond markets took a breather,” Stephen Innes, Chief Global Market Strategist at Axi, said. “It’s amazing what a weekend time out can do to right the ship on an even keel as bond markets rowed back into calmer waters.”
“The rise in yields has been led by optimism over growth, not inflation worries, and so doesn’t yet pose a threat to risk assets,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said.
The Reserve Bank met this morning and was scheduled to release a policy update at 2.30 pm AEDT. While no change to policy settings was expected, there was considerable interest in the bank’s inflation outlook after last week’s ructions on bond markets.
Going up
Mining giants BHP and Rio Tinto hit new peaks amid optimism about demand for raw materials as economies reopen. BHP gained 0.2 per cent and Rio 1.3 per cent. Both are due to pay record dividends this week. Fortescue Metals, which paid out yesterday, faded 0.6 per cent.
For once, sector giant Afterpay was not the prime mover behind the 1.4 per cent up-swing in tech stocks. WiseTech rose 3.5 per cent, Xero 3.3 per cent, Technology One 3.4 per cent and Appen 1.8 per cent. Afterpay started well but by mid-session trimmed its gain to 0.1 per cent.
The financial sector hit its highest level since last February. ANZ gained 1.4 per cent, NAB 0.7 per cent, CBA 0.7 per cent and Westpac 0.1 per cent. The sector is one of the prime beneficiaries of higher rates through margin opportunities.
Other heavyweight gainers included Transurban +1.9 per cent, Coles +1.6 per cent and Macquarie Group +1.3 per cent.
The best performers on the wider market were automotive retailer Eagers +5.9 per cent, metal recycler Sims + 5.4 per cent and biotech Clinuvel +5.2 per cent.
Personal protection provider Ansell climbed 1.6 per cent after announcing it “may” recommence its share buyback program on Friday following a pause.
Going down
Bond surrogates were among the morning’s principal drags, paring yesterday’s strong gains. Property giant Goodman fell 0.4 per cent, Omni Bridgeway 3.8 per cent and Scentre Group 2 per cent. Telstra dipped 0.3 per cent.
Gold stocks dragged for a second session after the yellow metal declined for a fifth night. Gold Road Resources gave up 4.7 per cent, Northern Star 3.2 per cent and Newcrest 1.9 per cent.
Energy giant Woodside slipped 1.8 per cent as oil continued to lose ground ahead of a meeting of the OPEC+ oil cartel. Brent crude eased another 81 cents or 1.3 per cent this morning to $US62.88 a barrel.
“Commodities were mostly weak overnight as the dollar regained a bit of ground,” Innes said. “OPEC+ will meet this Thursday, and expectations are that despite Saudi Arabia’s call for caution, most members will push for an increase in output.”
Meditech Mesoblast dipped 4.5 per cent after raising a US$110 million lifeline from a US investor group. The funds will come from SurgCenter Development, described as “one of the largest private operators of ambulatory surgical centers in the US specializing in spine, orthopaedic and total joint procedures”.
Platinum Asset Management dropped 3.1 per cent as it traded without its dividend. Other companies going ex-dividend included St Barbara -2 per cent and Cleanaway Waste -0.7 per cent.
Other markets
Asian markets trimmed early advances. The Asia Dow was last up 0.08 per cent. China’s Shanghai Composite inched up 0.11 per cent, Hong Kong’s Hang Seng 0.43 per cent and Japan’s Nikkei 0.4 per cent.
US futures unwound initial gains. S&P 500 futures were last off two points or less than 0.1 per cent.
Gold slid $6.90 or 0.4 per cent to $US1,716.10 an ounce.
