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Aussie shares extended last week’s gains, led by commodity and property stocks following a record close on Wall Street.

The S&P/ASX 200 climbed 39 points or 0.53 per cent by mid-session. The rally reversed most of a two-day decline at the end of last week.

BHP, Goodman Group and Rio Tinto were the pick of the heavyweights. An earnings upgrade lifted Charter Hall to a record. Ramsay Health Care retreated after buying a UK mental health provider.

What’s driving the market

Strong leads from the US and positive trading updates from the property sector helped the ASX add to last week’s gains. The ASX 200 put on 1.5 per cent across last week as omicron worries subsided.

Wall Street completed its post-omicron reversal as investors yawned at the hottest annual rate of inflation in 39 years. The S&P 500 climbed to its first record close since the new Covid variant was identified.

“The fact markets reacted the way they did to the highest headline CPI [consumer price index] number since 1982… tells us that the latest inflation horror story – and likely Fed response to be revealed this week – had been very well anticipated in the lead up to Friday’s data,” NAB’s Head of FX Strategy Ray Attrill said. “Indeed, markets were evidently braced for even worse news.”

Risk asset markets took Friday’s CPI report in their stride, the S&P500 ending the New York day up 1% to a new record closing high to be up 3.8% on the week, with the NASDAQ not far behind, up 0.7% on the day and 3.6% on the week,” he added

The ASX chased Wall Street higher for much of last week before caution set in ahead of Friday’s US inflation report. Wednesday night’s Federal Reserve policy update looms as the next global “risk event”.

The Fed is widely expected to accelerate the end of its bond-buying program. The principal market risk lies in the outlook for rate increases next year. ING expects the Fed to flag at least two rate increases next year and possibly three.

“Were it not for the emergence of the Omicron variant, we would have shifted from a two-rate hike view to a three-rate hike view for 2022,” the bank’s economics team wrote. “After all, we are forecasting real growth of 4.4% and inflation of 4.5%, which few would argue is compatible with the idea of keeping interest rates at close to zero.

“So far, the evidence suggests that Omicron won’t derail the global recovery story, but there is still uncertainty. Nonetheless, that three hike call looks increasingly likely.”

Going up

The battle to acquire Canada’s Noront Resources intensified after BHP and Andrew Forrest’s Wyloo Metals failed to reach an agreement on BHP’s takeover proposal. BHP had sought Wyloo’s backing for its bid for the nickel producer. Wyloo is Noront’s largest shareholder.

“Following constructive discussions between BHP and Wyloo Metals regarding the possibility of a mutually beneficial arrangement for the acquisition of Noront by BHP Lonsdale, the parties have determined that they are unable to reach an agreement,” BHP said.

Shares in the miner climbed 2.35 per cent. Competitors Rio Tinto and Fortescue Metals firmed 1.82 and 1.66 per cent, respectively.

An earnings upgrade lifted Charter Hall Group 5.22 per cent to an all-time high. The company’s properties were independently assessed with a $3.5 billion increase in value. Funds under management were raised to $61.3 billion, prompting the group to upgrade operating earnings per security guidance to no less than $1.05 per security.

Strong demand for industrial space helped Centuria Industrial REIT lease an additional 106,832 square metres this financial year. The increase produced a 10 per cent lift in rentals. The share price rose 0.51 per cent.

CSL crept up 0.13 per cent after confirming media reports it is in talks to buy Swiss giant Vifor Pharma. The company said there was no certainty any transaction would result.

Brickworks climbed 2.94 per cent after announcing it anticipates record property earnings this half. The building products manufacturer expects property earnings to increase from $253 million in FY21 to $290-$310 million this half.

Childcare operator G8 Education rose 0.46 per cent on news calendar-year operating earnings and profit were running ahead of consensus estimates. Occupancy rates improved to 76.5 per cent, within 2.1 percentage points of CY19.

Crown Resorts edged up 0.13 per cent after warning staff shortages were impacting the reopening of its casino resorts. Full-year corporate costs were expected to be higher than last year at $130 million.

Explosives manufacturer Orica inched up 0.14 per cent after announcing the sale of its Minova business to a European investment firm for $180 million. The sale is part of the company’s strategy of offloading non-core assets.

Aside from Charter Hall, the morning’s best performers were gold miner St Barbara +5.34 per cent, wealth manager Netwealth +5.01 per cent and mineral sands miner Iluka +4.25 per cent.

At the top end of the market, Goodman put on 1.96 per cent, Woodside 1.54 per cent and Commonwealth Bank 0.92 per cent.

Going down

Ramsay Health Care will splash $1.4 billion to acquire UK mental healthcare provider Elysium from a private equity firm. The acquisition will be funded through existing debt facilities. Elysium has a long relationship with the UK’s National Health Service.

“This is an excellent opportunity for Ramsay to expand its successful health care services platform in the UK through the acquisition of an established and reputable business, with a strong track record of growth and a robust pipeline of development opportunities,” Managing Director and CEO Craig McNally said. The share price eased 1.32 per cent.

A guidance upgrade failed to lift Centuria Office REIT. The share price dipped 0.85 per cent after the trust raised its full-year funds from operations outlook from 18 cents per unit for 18.3 cpu. The trust reaffirmed distribution guidance of 16.6 cpu, a yield of 7.1 per cent.

Insurers were among today’s worst performers. IAG sank 3.64 per cent to a nine-year low. QBE lost 3.01 per cent and Suncorp 0.65 per cent.

Other markets

A strong morning on Asian markets helped lift US equity futures. The Asia Dow firmed 0.85 per cent, China’s Shanghai Composite 0.93 per cent, Hong Kong’s Hang Seng 1.45 per cent and Japan’s Nikkei 1.03 per cent.

S&P 500 futures climbed 19 points or 0.4 per cent.

Oil continued to shed omicron demand worries. Brent crude rallied 84 US cents or 1.12 per cent to US$75.99 a barrel.

Gold bounced 90 US cents or 0.05 per cent to US$1,785.70 an ounce.

The dollar edged up 0.04 per cent to 71.67 US cents.

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