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Rebounding commodity prices helped lift the share market for a third day despite overnight weakness on Wall Street.
The S&P/ASX 200 rallied 33 points or 0.47 per cent to its strongest level in four sessions.
Iron ore and gold miners led the advance. Commonwealth Bank hit the latest in a string of all-time highs. Beleaguered data analytics firm Nuix bounced more than 11 per cent. A production downgrade send miner St Barbara down more than 9 per cent.
What’s driving the market
Positive US futures and reversals in key commodities helped the market weather Wall Street’s first decline in three sessions. S&P 500 futures climbed ten points or 0.25 per cent this morning, settling nerves after the index shed 0.25 per cent overnight.
The big three bulk metal producers marched higher after iron ore bounced 3.7 per cent and industrial metals recovered. Rio Tinto rose 2.13 per cent, BHP 1.83 per cent and Fortescue Metals 1.56 per cent.
Ore prices rebounded yesterday after data showed Chinese steel production hit record pace last month despite a regulatory clampdown on pollution and speculative mania. Analysts said prices reflected strong demand and weak supply.
“As China’s steel production still continues to expand, its steel margins remain elevated and seaborne iron ore supply remains constrained, we think that the iron ore price can stay around the current level through 2Q, but is likely to remain highly volatile,” analysts at Morgan Stanley wrote.
The ASX index of gold miners followed the metal price to four-month highs. Resolute gained 5.24 per cent, Perseus 5.47 per cent, Evolution 4.88 per cent and Newcrest 1.31 per cent. Gold, a traditional hedge against inflation, has been one of the big winners of the latest bout of market nerves over rising price pressures.
The minutes from this month’s Reserve Bank policy meeting showed the board expect headline inflation to spike to 3 per cent this year before fading back below the bank’s 2 -3 per cent target range.
“In the baseline scenario, underlying inflation was expected to increase from 1½ per cent over 2021 to close to 2 per cent by mid 2023. Headline inflation was expected to spike above 3 per cent over the year to June 2021, partly as the effect of COVID-19-related one-off price changes dropped out of the calculation, before declining back below 2 per cent over the remainder of the forecast period,” the minutes noted.
The board reaffirmed their intent to keep the cash rate at a record-low 0.1 per cent “until actual inflation is sustainably within the 2 to 3 per cent target range… The Board viewed these conditions as unlikely until 2024 at the earliest.”
Going up
Aristocrat Leisure climbed 3.34 per cent back towards yesterday’s record high. The poker machine manufacturer yesterday upgraded its half-year outlook.
Commonwealth Bank notched a tenth straight record high, rising 0.31 per cent. The largest of the big four banks has significantly outperformed its peers following recent trading updates. ANZ rallied 0.68 per cent today, NAB 0.54 per cent and Westpac 0.02 per cent. Macquarie Group bounced 1.77 per cent after going ex-dividend yesterday.
Other notable gains at the pointy end of the market included Telstra +1.9 per cent, Woodside +1.62 per cent and Woolworths +0.62 per cent.
Nuix rebounded 11.15 per cent from yesterday’s record low as the data analytics firm reassured investors the outlook was secure. The share price tanked yesterday amid media speculation about governance and communication. Chair Jeff Bleich said the company had not managed the transition from private to public as well as it might.
“Building trust with you, our investors really is our top priority,” Mr Bleich told today’s Investor Day.
Going down
Miner St Barbara missed the upswing in the gold sub-sector after downgrading production guidance. Disappointing mining rates at the Simberi mine in PNG and a shortfall in personnel at the Leonora mine contributed to the decision to cut full-year guidance to 330,000-360,000 ounces from previous guidance of 370,000-380,000. The share price dived 9.51 per cent.
Fiber cement giant James Hardie sank 4 per cent after warning of rising costs. While the company expects income to increase by 14-24 per cent next financial year, the profit outlook will be crimped by increased freight and pulp costs.
Avita Medical sank 9.88 per cent to its weakest level in more than two years. The burns injury specialist reported third-quarter results last week.
The tech sector hovered near seven-month lows as the spectre of rising inflation continued to weigh. Nearmap fell 3.24 per cent, WiseTech 1.44 per cent and Afterpay 1.52 per cent.
Headphones manufacturer Audeara sank 5 per cent upon listing this morning.
Heavyweight drags this session included Transurban -0.92 per cent, Goodman -0.58 per cent and CSL -0.25 per cent.
Other markets
A buoyant morning on Asian markets lifted the Asia Dow 1.55 per cent, Hong Kong’s Hang Seng 1.15 per cent and Japan’s Nikkei 2.13 per cent. China’s Shanghai Composite inched up 0.03 per cent.
Oil added to overnight gains. Brent crude climbed 19 cents or 0.27 per cent to US$69.65 a barrel.
Gold rose $3.80 or 0.2 per cent to US$1,871.40 an ounce.
Improving commodity prices helped raise the dollar 0.19 per cent to 77.87 US cents.
