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The share market rebounded from three days of falls as a Wall Street rally helped soothe concerns about a rate increase tomorrow.

The S&P/ASX 200 jumped 66 points or 1 per cent by mid-session.

Ten of eleven sectors rose after Wall Street rallied into the Independence Day long weekend. Property companies, energy producers and healthcare providers led the advance.

What’s driving the market

Aussie stocks played catch-up after Wall Street got the second half of the year off to a positive start. The S&P 500 overcame early pressure on Friday to advance 1.06 per cent.

The rally suggested minimal investor concern about the risk of negative asset movements across the July 4 long weekend. Market volatility has fallen over the last fortnight since peaking in mid-June – a positive sign for equity investors.

“May be, after a dismal first half (the worst [in the US] since the early 1970s), all the bad news are already priced in,” NAB currency strategist Rodrigo Catril said.

“Alternatively the recent decline in equity volatility is a red herring with more pain on the way. The upcoming US earning reporting season, which begins July 15, is going to be a big test with many highlighting the risk of some significant downward revisions to earnings.”

Australian investors will get quarterly updates from some firms later this month, but the main event – the full-year reporting season – kicks off in earnest next month. A more immediate concern is tomorrow’s RBA policy meeting.

A majority of economists expect the central bank to raise the cash rate target by 50 basis points to 1.35 per cent. Governor Philip Lowe last month indicated he expected discussion at tomorrow’s meeting to hinge on whether to raise by 25 points or 50. Record retail sales last month suggested recent increases have yet to bite.

“It’s hard to see the RBA moving away from its tightening bias and the market is probably right in predicting a 50bpts rise tomorrow,” Peter Esho, co-founder of property investor Wealthi, said. 

“For us it’s not about what happens tomorrow, but what happens towards the end of the year. We’re of the view that rate rises will cap out, probably in 6 months, followed by a short and sharp recession that will act as a reset.” 

Going up

Oil’s first advance in four sessions kept energy providers well bid. Santos jumped 2.57 per cent. Woodside Energy gained 2.17 per cent.

Property was the morning’s other standout as a recent bond market rally pressured yields, increasing the relative appeal of REITs and other “bond proxies”. Ingenia Group put on 5.44 per cent, SCA Property 2.17 per cent and Scentre Group 2.1 per cent.

Home Consortium climbed 1.94 per cent after announcing a new unlisted wholesale fund targetting “superior risk-adjusted returns”. The HMC Capital Partners Fund 1 will invest in public and private companies with “real asset backing”.

Waypoint REIT rose 1.93 per cent after its 404 fuel and convenience stores were revalued by $139.5 million for the six months to June 30. The reappraisal adds approximately 19 cents to the trust’s net tangible assets per security.

Among the index heavyweights, James Hardie climbed 4.65 per cent, Wesfarmers 2.4 per cent and Goodman Group 1.95 per cent. The big four banks advanced between 1.2 and 1.8 per cent.

A storm update reassured investors in Suncorp as extreme rains caused extensive flooding on the east coast. Shares in the insurer rose 0.27 per cent on news claim volumes so far were low, but expected to increase. The company warned reinsurance premiums for FY23 had increased significantly due to “the hardening of the global reinsurance market”.

The announcement of new supply deals with two US chain stores lifted infant formula-maker Bubs 1.61 per cent. A fourth planeload of the firm’s formula is due to land in the US on Wednesday.

Going down

BHP fell 1.35 per cent in the wake of Friday’s heavy commodity falls. Fortescue Metals shed 0.29 per cent, Lake Resources 3.29 per cent and Liontown 2.5 per cent.

Link Administration eased 1.84 per cent after the board said it could not support a revised takeover offer from Dye & Durham. The Canadian software company reduced its initial offer from $5.50 to $4.30 per share. Link said the board “does not believe it is able to recommend a $4.30 per share transaction for control of Link Group”.

Gaming group PointsBet sank 7.29 per cent as its shares traded without the right to a bonus issue.

Struggling fund manager Magellan lost 6.31 per cent on news head of sales Frank Casarotti will exit the company. Rivals Pendal and Perpetual eased 2.46 and 2.8 per cent, respectively.

Other markets

A mixed morning on Asian markets helped push US equity futures lower. The Asia Dow inched up 0.09 per cent. Japan’s Nikkei improved 0.6 per cent. China’s Shanghai Composite reversed 0.12 per cent. Hong Kong’s Hang Seng shed 0.89 per cent.

S&P 500 futures retreated 27 points or 0.7 per cent ahead of tonight’s market holiday.

Oil began a new week in retreat. Brent crude declined 39 US cents or 0.35 per cent to US$111.24 a barrel.

Gold rallied US$9.50 or 0.5 per cent to US$1,811 an ounce.

The dollar slipped 0.1 per cent to 68.06 US cents.

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