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The share market looked set to end a V-shaped week on the upswing as a rebound in commodity prices helped stocks rise for a second day.
Mining companies led as the S&P/ASX 200 rose 34 points or 0.5 per cent by mid-session. The rally lifted the benchmark more than 50 points into positive territory for the week.
Tech and financials offered support as fewer than half the 11 sectors advanced. Supermarkets and property stocks were among the leading drags.
What’s driving the market
The ASX 200 was on track to break a run of two straight losing weeks after overcoming weakness through the first half of the week. The Australian benchmark has bounced more than 150 points since a seven-week low on Wednesday.
Buyers returned over the last two sessions after the Reserve Bank hinted at a slowdown in rate increases and as weaker energy prices and markets rates soothed inflation worries. Governor Philip Lowe said yesterday that the risk of “overtightening” increased as interest rates move higher.
Kunal Sawhney, chief executive of research group Kalkine, said the market’s response indicated it was resigned to higher rates.
“The cash rate already sits at 2.35% and would in the coming months, reach 3%, which in itself is a high figure in absolute terms. So, even if RBA goes for a 25 bps hike in its next meeting, it will not have a profound impact on the stock market that seems to have already accepted that bears have taken control of markets this year,” Sawhney said.
Overnight, Wall Street brushed off hawkish interest rate commentary from the Federal Reserve. The S&P 500 recovered in afternoon trade to a gain of 0.66 per cent.
“Fed Chair Powell said the Fed would continue to tighten ‘until the job is done’. As far as the interest rate market is concerned, 72 bp of a 75 bp rate hike for the upcoming Sep FOMC is baked into the cake, followed by a 50bp and then a 25bp into year-end. The slowing of rate hikes follows the path the Bank of Canada took earlier this week,” Tony Sycamore, market analyst at City Index, said.
Going up
Mining services provider Mineral Resources jumped 12.8 per cent to an all-time high on the prospect of a lithium spin-off. The company said it was considering listing its lithium business, but plans were not sufficiently advanced to warrant disclosure.
Embattled data forensics firm Nuix briefly surged 26.09 per cent on takeover speculation before trade was paused. The rally dwindled to 17.39 per cent after the firm acknowledged media speculation but said it had not received a bid or written proposal from mooted suitor Reveal, a US tech firm.
Gold miners kicked higher for a second day despite pressure on precious metals overnight. The ASX gold index hit a near four-year low earlier in the week as the yellow metal fell towards key support.
De Grey rallied 12.63 per cent, Sandfire 5.78 per cent and Silver Lake Resources 4.27 per cent. Newcrest gained 3.53 per cent.
Bulk metal miners rose with iron ore prices on signs of progress in China’s property crisis. The city of Zhengzhou announced it would issue loans so developers could complete stalled housing projects.
Fortescue Metals rallied 5.15 per cent, BHP 2.13 per cent and Rio Tinto 1.13 per cent.
The big four banks gained between 0.55 and 1.24 per cent.
Going down
Ramsay Health Care eased 1.45 per cent after ending negotiations with IHH Healthcare Berhad for the sale of Ramsay’s joint venture in Asia. Ramsay said discussions had concluded without a binding agreement for the sale of Ramsay Sime Darby.
Supermarkets and real estate investment trusts were among the morning’s biggest drags. Coles shed 1.32 per cent, Woolworths 1.65 per cent and Goodman Group 1.3 per cent.
A week-long rally in lithium miners showed its first cracks. Liontown Resources retreated 2.16 per cent. Core Lithium reversed 1.25 per cent. Lake Resources eased 2.24 per cent.
Nine Entertainment dropped 2.7 per cent as its shares traded without the right to the latest dividend.
Other markets
An upbeat morning on Asian markets saw the Asia Dow put on 1.02 per cent, China’s Shanghai Composite 0.29 per cent, Hong Kong’s Hang Seng 2 per cent and Japan’s Nikkei 0.41 per cent.
US futures improved steadily. S&P 500 futures were recently ahead 14 points or 0.35 per cent.
Oil built on last night’s rebound. Brent crude climbed 51 US cents or almost 0.6 per cent to US$89.66 a barrel.
Gold rose US$7.40 or 0.4 per cent to US$1,727.60 an ounce.
The dollar rallied strongly this morning, rising 0.71 per cent to 68.12 US cents.
