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Resource stocks surged to a six-month high as the halo effect from record gold prices and fiscal stimulus efforts encouraged buyers.
A 2 per cent rally in materials helped the S&P/ASX 200 advance 25 points or 0.4 per cent. A positive close this afternoon would deliver the market’s first back-to-back gains in three weeks.
This morning’s rally lifted the materials sector to its highest level since late January, when COVID-19 was still a local health issue in an obscure Chinese province. Brazil’s struggles to contain the virus has been a godsend for Australia’s iron ore miners. Fortescue climbed 4.2 per cent this morning to an all-time high. Rio Tinto rose 2.3 per cent to its highest level since before Australia Day. BHP gained 2.4 per cent.
Gold has been another big winner from the pandemic as investors sought havens from tumbling interest rates, a falling greenback and the inflationary impact of government stimulus efforts. The precious metal hit record levels overnight and extended gains this morning. The gold continuous contract rose $33 or 1.7 per cent to US$1.964 an ounce.
Several gold stocks moved further into uncharted territory: Perseus Mining gained 2.6 per cent, Northern Star 0.9 per cent and Saracen Minerals 0.6 per cent. Sector heavyweight Newcrest climbed 2.6 per cent to its strongest point since last September.
Support came from the industrials and consumer staples sectors. Crop protection firm Nufarm put on 7.4 per cent, toll road operator Transurban 1.4 per cent, construction group Cimic 1.6 per cent, Woolworths 0.3 per cent and Coles 0.2 per cent.
Consumer lending group Credit Corp jumped 10.8 per cent after demonstrating its business model withstood COVID-19. The lender announced a full-year net profit after tax of $15.5 million despite $64.1 million in impairments and provisions related to the pandemic. A downbeat morning for the broader financial sector saw Westpac drop 1 per cent, ANZ 0.4 per cent and NAB 0.1 per cent. CBA edged up less than 0.1 per cent.
Online furniture retailer Temple & Webster was another stock to probe record levels, rising 5.8 per cent on news it had lifted full-year earnings 483 per cent to $8.5 million. GUD Holdings put on 3.4 per cent on news revenue increased 1 per cent to $438 million despite the impact of the virus on trading volumes.
Victoria announced a decline in new coronavirus cases to 384 from a record 532 the previous day. New South Wales reported 14 new cases.
US index futures built steadily. S&P 500 index futures were recently up 13 points or 0.4 per cent. A solid morning on Asian markets saw China’s Shanghai Composite gain 1 per cent, Hong Kong’s Hang Seng 0.9 per cent and Japan’s Nikkei 0.3 per cent.
Oil built on an overnight reversal. Brent crude rose 23 cents or 0.5 per cent this morning to $US43.64 a barrel.
The dollar continued to appreciate against a falling greenback, rising 0.28 per cent to 71.69 US cents.
What’s hot today and what’s not:
Hot today: Another day, another huge win for a junior gold explorer. Chesser Resources (ASX:CHZ) almost tripled in value after announcing “multiple spectacular high-grade” hits at its flagship project in Senegal. Drilling intersected mineralisation across a 200m zone in five holes. “Results like this are exceptional and rare,” Managing Director and CEO Mike Brown said. “The consistency, high-grade and thickness from near surface is remarkable.” The share price flew from 10.5 cents to 30.5 cents before paring its gain to 143 per cent at 25.5 cents.
Not today: Speculators looking for quick returns from Blue Star Helium’s (ASX:BNL) US drilling campaign lost patience when the company revealed any action could be more than four months away. While the company spruiked the fact it had staked its first drilling location at the Enterprise Project in Colorado, sellers were more interested in news the company had yet to submit an Application for Permit to Drill. Blue Star said drilling approval normally takes around four months after submission. The share price sank 19.4 per cent.
