Join our daily newsletter At The Bell to receive exclusive market insights
Australian shares climbed to a one-week high as Wall Street’s best three-session rally since November 2020 sharpened hopes the worst of the January market rout had passed.
The S&P/ASX 200 rallied 85 points or 1.22 per cent towards its third gain in four sessions. The benchmark has put on more than 300 points since last week’s eight-month low.
Energy and materials producers led a broad rally. Fortescue Metals, Rio Tinto and Woodside Petroleum were the pick of the heavyweights.
What’s driving the market
Confidence has flooded back into financial markets as volatility indicators fall back and equities regain their footing. The US Federal Reserve rolled out a parade of speakers this week to reassure shaky markets the central bank’s rates plans do not herald the end of the post-pandemic recovery.
US stocks rose for a third night after several Fed members said there was little appetite for raising rates by 50 basis points next month. Markets swung violently last week as investors factored in a series of rate rises this year as the Fed tries to get on top of inflation.
The S&P 500 climbed 0.69 per cent overnight to extend its three-day gain to 5.5 per cent. The Dow gained 0.78 per cent and the Nasdaq Composite 0.75 per cent.
“The market has strung together a few solid up days,” Jim Paulsen, Leuthold Group chief investment strategist, said. “This strong showing is causing more investors to wonder if the correction is over and raising concerns that they could miss out on a nice post-correction rally”
The Australian volatility index this morning touched its lowest level in a week and a half. Overnight, the US VIX declined 9 per cent.
Nasdaq and S&P 500 futures climbed following an upbeat after-market earnings update from Google parent company Alphabet. Nasdaq futures jumped 0.95 per cent. S&P 500 futures added 0.45 per cent. Alphabet shares firmed 9.16 per cent in extended trading.
Going up
Solid overnight gains in industrial metals kept the major miners well bid. Fortescue Metals rallied 3.78 per cent, Rio Tinto 2.77 per cent and BHP 1.94 per cent. Woodside put on 2.99 per cent.
Champion Iron added 5.84 per cent, lithium miner Allkem 4.78 per cent and South32 3.92 per cent.
Telstra firmed 1.52 per cent on plans to invest an additional $1.4-$1.6 billion over the next five years in infrastructure. The company will build and manage a fibre network for global communications company Viasat, and add up to 200,000 kilometres of new inter-city optical fibre.
“Investing in these two truly significant nation-building projects will see us continue to have the largest intercity fibre network in the country, helping to future proof Australia’s digital economy and further improving connectivity in regional Australia,” CEO Andrew Penn said.
Genworth rose 5.85 per cent to a seven-month high in anticipation of an improved half-year result after the mortgage insurer reported claims costs remained low. The company said it benefitted from rising house prices, falling delinquencies and low numbers of payouts.
Miner Sandfire edged up 1.49 per cent after completing the US$1.865 billion acquisition of the MATSA Mining Complex in Spain. The transaction transforms Sandfire into “one of the largest copper-focused producers on the ASX”, the company said.
At the junior end of the market, Shree Minerals jumped 31.82 per cent after exploration studies confirmed the presence of lithium at its Dundas gold project in WA. Chase Mining rallied 14.29 per cent after identifying rare earth and base metal potential in the northern Barkly Tableland.
Renascor Resources climbed 17.19 per cent upon obtaining conditional approval for a $185 federal government loan to develop a graphite project in South Australia. The loan would come from the government’s Critical Minerals Facility, established last year to secure vital supplies of resources.
Going down
Packaging giant Amcor eased 3.66 per cent after reaffirming its full-year outlook. Sales increased 12 per cent over the first half despite “a persistently challenging and dynamic operating environment”. The company was able to pass on costs through price increases as raw materials grew more expensive.
Tech stocks underperformed the broader market as long-term borrowing costs turned higher. The yield on ten-year Australian government bonds climbed more than two basis points. Block fell 3.7 per cent, Zip Co 3.63 per cent and Codan 2.45 per cent.
Credit Corp reversed some of yesterday’s post-earnings bounce with a fall of 5.39 per cent. PointsBet dropped 3.68 per cent, Ansell 2.21 per cent and Reece 2.21 per cent.
Other markets
Asian markets took their cues from the US. The Asia Dow gained 1.19 per cent. Japan’s Nikkei added 1.48 per cent. Chinese markets remained closed for the Lunar New Year.
Oil advanced ahead of tonight’s OPEC+ meeting. Brent crude rose 31 US cents or 0.35 per cent to US$89.47 a barrel.
Gold was broadly steady, up 20 US cents or 0.01 per cent to US$1,801.70 an ounce.
The dollar added to overnight gains, rising 0.07 per cent to 71.38 US cents.
