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Aussie shares pushed towards their longest winning run in four months as financial markets continued to claw back losses triggered by the emergence of the omicron Covid variant.
The S&P/ASX 200 climbed 74 points or 1.02 per cent to its highest in eight sessions. At its peak, the index drew within 15 points of pre-omicron levels.
An 8 per cent jump in iron ore prices lifted the big three producers towards multi-month highs. The tech sector bounced 1.8 per cent further from Monday’s four-month low.
What’s driving the market
Whatever science eventually has to say, the verdict from financial markets is in: omicron poses at most a negligible threat to global economic growth. US stocks surged for a second night, ending the session within touching distance of where they were before South African authorities identified the latest variant.
The Nasdaq Composite had its best night since March, jumping 3.03 per cent. The rally recouped all of last week’s losses. The S&P 500 put on 2.07 per cent.
“Although scientists are still evaluating the severity of the new virus strain and how well current vaccines can work against it, Omicron fears seem to be abating in the stock market,” Kalkine Group CEO Kunal Sawhney said.
“‘Buy-the-dip’ investors are flooding back into the market, seeking bargains out of the wreckage of the last few weeks. Amid these changing dynamics, it will be interesting to see if the equity market will see its usual December boost – the Santa Claus Rally.”
The improvement in risk appetite boosted some of the ASX worst performers over the last week. Biotech Mesoblast soared 9.38 per cent, Z1P Co 8.91 per cent and Redbubble 6.65 per cent.
The tech sector, which bore the worst of the sell-off, added to yesterday’s rebound gains. Tyro Payments put on 3.9 per cent, Afterpay 3.29 per cent and WiseTech 3.01 per cent.
Going up
Iron ore producers rallied following an 8.1 per cent jump in ore prices after trade data showed a surge in ore imports into China last month. Fortescue Metals climbed 2.44 per cent, Rio Tinto 2 per cent and BHP 1.58 per cent.
China-facing commodity stocks saw gains after China’s central bank loosened lending restrictions to pump more liquidity into the system.
“China’s move is expected to unleash over 1 trillion yuan into the financial system, easing liquidity constraints and helping the world’s second-largest economy escape slowdown,” Kalkine’s Sawhney said.
“Although Australia and China have been at loggerheads over recent years due to trade sanctions on specific commodities, the two economies still share strong trade links. As any risk of a slowdown in China is often painted as a key uncertainty for Australia’s economic outlook, China’s recent move to stabilise the economy is certainly a piece of welcome news for Australia.”
Mineral Resources tacked on 5.42 per cent, Lynas Rare Earths 4.38 per cent and Pilbara Minerals 3.81 per cent.
Oil Search and Santos rallied after clearing another hurdle on the path to creating a top 20 global oil and gas producer. Papua New Guinea’s Independent Consumer and Competition Commission waved through a merger proposal. The deal still has to pass the National Court of PNG at a hearing tomorrow.
Oil Search shares rallied 3.41 per cent. Santos gained 3.34 per cent.
Woodside Petroleum unveiled plans to invest US$5 billion in emerging energy sources as part of a global shift towards greener energy. The company aims to reduce its net emissions by 30 per cent by 2030 and reach zero by “2050 or sooner”. The share price lifted 2.46 per cent.
Nickel Mines rose 1.5 per cent after striking a deal to acquire a 70 per cent stake in an Indonesian nickel project. The miner will pay its partner, Shanghai Decent, US$571 million for an equity interest in the Oracle Nickel Project in central Sulawesi.
Investors in junior explorer Emmerson Resources had a morning to remember as the share price briefly tripled on “stunning” drilling results from the company’s Hermitage Project at Tennant Creek. The share price charged from 7.4 cents to 22.25 cents and was lately up 136.5 per cent at 17.5 cents.
Managing Director Rob Bills said the results reflected “very extensive, very high-grade copper mineralisation, with intervals of high-grade gold and cobalt”.
Telstra edged up 0.75 per cent after spending $616 million to buy the maximum possible low band spectrum permitted in the latest auction. Chief Financial Officer Vicki Brady said the spend was important for maintaining the telco’s mobile network, particularly in regional and rural Australia.
Going down
The high-street banks were mixed as a rebound in bond yields eased. ANZ dipped 0.51 per cent and CBA 0.13 per cent. NAB and Westpac improved 0.14 per cent.
Coles dropped 0.28 per cent and Brambles 0.29 per cent.
Home-meal delivery service Marley Spoon, one of the big winners from the initial pandemic bonanza in “stay-at-home” stocks, fell 8.28 per cent to a 20-month low. Shares that peaked at $3.80 last year traded at 74 cents this morning.
The index’s worst performers were Appen -2.31 per cent, Platinum Asset Management -2.21 per cent and Stockland -2.17 per cent.
Other markets
Asian markets rose for a second session. The Asia Dow put on 0.42per cent, China’s Shanghai Composite 0.08 per cent, Hong Kong’s Hang Seng 0.14 per cent and Japan’s Nikkei 1 per cent.
US futures were cautiously positive. S&P 500 futures added nine points or 0.2 per cent.
Oil trimmed four days of gains. Brent crude eased 32 US cents or 0.4 per cent to US$75.12 a barrel.
Gold edged up US$1.30 or almost 0.1 per cent to US$1,786 an ounce.
The dollar bounced 1 per cent overnight and was lately trading at 71.2 US cents.
