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Aussie shares bounced almost four per cent after the US Federal Reserve stepped in overnight to settle jittery markets.

A relief rally swept the S&P/ASX 200 up 216 points or 3.8 per cent, breaking a run of three straight losses that had stripped 429 points or almost 7 per cent from the index by yesterday’s close.

Market sentiment soured last week amid speculation a stimulus-fuelled global rebound from pandemic lows had run too far, too fast. Wall Street suffered its worst weekly decline since March. The pendulum swung from fear back to FOMO overnight when the Fed reminded investors it has yet more weapons in its arsenal. The S&P 500 reversed from a 2.5 per cent loss to a closing gain of 0.83 per cent after the central bank announced it would broaden its bond-buying program to help ease credit conditions.

US futures continued to rally this morning, hinting at further gains to come. S&P 500 index futures were recently ahead 25 points or 0.8 per cent. Dow futures charged 157 points or 0.6 per cent. Fed Chair Jerome Powell is due to testify before Congress tonight.

The rising tide lifted almost all Australian ships. All 11 sectors advanced. One hundred and ninety-seven of the benchmark index’s 200 companies advanced (Mineral Resources eased 0.4 per cent and two others were in trading halts). Gains ranged from 0.5 per cent for Spark New Zealand to 16.6 per cent for energy company Viva.

At the big end of town, all 20 components of the S&P/ASX 20 gained at least 0.9 per cent. Amcor was the pick of the pack with a rise of 6.3 per cent, followed by shopping centre operator Scentre Group and Macquarie Group, both up 5.5 per cent. ANZ and CBA put on 4.2 per cent, NAB 4 per cent and Westpac 3.7 per cent. Miners BHP and Rio Tinto rose 2.8 per cent and 3.1 per cent, respectively.

The Australian volatility index, the VIX, eased 4.8 per cent to 22.6. The index peaked above 50 at the height of the pandemic, and neared 30 as last week’s market sell-off accelerated.

Afterpay‘s record run continued with a rise of 10.1 per cent to a new all-time high. The BNPL darling’s share price has more than quintupled to $56.35 since its March 23 low below $10. Motoring accessories seller Super Retail Group soared 12.4 per cent after raising $158 million from institutional shareholders.  

The Reserve Bank thinks the economic downturn may be shallower than it originally expected, according to the minutes from this month’s policy meeting. While acknowledging huge job losses and a collapse in spending, the bank noted, “The rate of infections had declined significantly and some restrictions had been eased earlier than had previously been thought likely.” Despite signs of improvement, the bank said fiscal and monetary support would “likely” be required for some time. The board held the cash rate at a record low 0.25 per cent.

Asian markets chased Wall Steet. China’s Shanghai Composite added 0.9 per cent, Hong Kong’s Hang Seng 2.6 per cent and Japan’s Nikkei 3.3 per cent.

Oil trimmed its overnight gains. Brent crude dipped 13 cents or 0.3 per cent this morning to $US39.59 a barrel. The international benchmark rallied 99 cents or 2.6 per cent overnight. Gold bounced $12.20 or 0.7 per cent to $US1,739.80 an ounce.

The dollar extended its overnight bounce, rising 0.65 per cent to 69.63 US cents.

What’s hot today and what’s not:

Hot today: Goldminer Rox Resources (ASX:RXL) rewarded loyal investors in its capital raising with a quick 50 per cent return. A day after announcing it had raised $5.3 million, the miner released promising assays from its Youanmi gold project in WA. Investors who took part in the raising at 2.4 cents had a chance to cash out at 3.7 cents this morning. Managing Director Alex Passmore described the latest assays as “the best we’ve seen” at the project.  

Not today: The prospect of a second wave of coronavirus infections prompted water treatment specialist Phoslock Environmental Technologies (ASX:PET) to downgrade its revenue outlook for the rest of the year. Phoslock treats polluted waterways as far away as the US and China and warned of delays as governments focus on COVID-19. The company slashed its full-year revenue forecast to a range of $30 – $40 million. The share price slid 12.6 per cent to a 12-week low.

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