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The share market charged towards its biggest gain in at least three weeks after the prospect of an 11th-hour stimulus deal lifted Wall Street.
The S&P/ASX 200 rallied 80 points or 1.2 per cent to its highest level in five sessions. The advance positioned the index for its best return since an 82.5-point bounce on November 24.
What’s driving the market
US stocks jumped overnight amid signs a divided Congress was getting serious about a stimulus deal. Twelve million Americans are due to lose their benefits on Boxing Day unless a new bill is approved. The four highest ranking politicians in Congress met twice this morning. Treasury Secretary Steven Mnuchin also took part. At time of writing, there was no word on whether the meetings yielded a breakthrough.
“There is an increasing sense that both parties are very close to finding a compromise and agree on a bill based on a $748 billion bipartisan proposal,” NAB Currency Strategist Rodrigo Catril wrote.
“We’re not leaving here without a Covid package,” Senate Majority Leader Mitch McConnell told reporters earlier in the day. “It’s not going to happen. We’re going to stay here until we get a Covid package, no matter how long it takes.”
The S&P 500 climbed 1.29 per cent overnight as the pending meeting sharpened expectations. Index futures drifted four points or 0.1 per cent lower this morning as investors waited to see if there was fire behind last night’s smoke. Wall Street’s overnight rebound broke a run of three straight losses for the S&P 500 as investors lost patience with months of “stimulus progress” without a deal.
Going up
The local market saw broad gains. All 11 sectors advanced. Gains ranged from 0.4 per cent for healthcare to 2.8 per cent for the technology sector.
Wesfarmers, Afterpay, Xero and Eagers Automotive were among companies on track for record closes. Wesfarmers put on 1 per cent and Afterpay 4.6 per cent. Xero gained 2.1 per cent and Eagers 1.4 per cent.
A tentative rebound in iron ore lifted the materials sector. Fortescue Metals climbed 2.8 per cent, BHP 2.3 per cent and Rio Tinto 1.9 per cent. Ore prices skidded 3.9 per cent on Monday after Chinese steelmakers called for an inquiry into soaring prices. The spot price bounced 0.8 per cent yesterday after a report showed Chinese factory activity expanded last month at its fastest pace in 20 months.
ANZ rose 1.8 per cent after CEO Shayne Elliott told shareholders the bank was the only one of the big four that had not had to raise capital over the last few years.
“Through our actions over the last few years, we have freed up $12.5 billion of your capital, which has enabled us to invest in the business while buying back more than 100 million shares,” he told today’s virtual AGM. “As a result, we are the only major bank in Australia that hasn’t diluted shareholders in recent years.”
NAB and CBA gained 1.5 per cent. Westpac added 1.6 per cent. Macquarie Group put on 1.3 per cent. Other heavyweight movers included Woodside Petroleum +1.3 per cent, Newcrest +1 per cent and Woolworths +1.3 per cent. CSL dipped 0.1 per cent.
Travel and tourism stocks attracted a bid at multi-week lows. Webjet bounced 5.7 per cent and Flight Centre 4.7 per cent. Qantas gained 2 per cent.
Coal companies steadied after yesterday’s steep falls, which followed news of a Chinese ban. Whitehaven Coal bounced 5.4 per cent and Coronado Global Resources 1 per cent. New Hope faded 1.1 per cent and Yancoal 1.3 per cent.
Going down
Real estate investment trusts were mixed as a rise in US bond yields capped appetite for yield stocks. Cromwell Property Group dipped 1.3 per cent, Abacus 1.2 per cent and SCA 0.9 per cent.
Mesoblast sank 2.1 per cent before entering a trading halt pending a corporate update. The biopharma yesterday released disappointing results from a late-stage trial of its treatment for chronic heart problems.
Lithium miner Pilbara Mining skidded 12.9 per cent after raising $61 million from institutional investors at a substantial discount to recent prices. The funds will be used to acquire a neighbouring lithium project.
Network services company Service Stream tanked 11.3 per cent after outlining details of a new deal with nbn Co.
Other markets
Asian markets moved cautiously higher. China’s Shanghai Composite gained 0.1 per cent, Hong Kong’s Hang Seng 1 per cent and Japan’s Nikkei 0.3 per cent.
Oil retreated from an overnight nine-month high. Brent crude dipped nine cents or 0.2 per cent to $US50.67 a barrel. Gold edged up $1.10 or 0.1 per cent to $US1,856.40 an ounce.
The dollar was broadly steady at 75.49 US cents.
What’s hot today and what’s not
Hot today: News of a US launch and best ever month’s trade lifted Openpay (ASX:OPY) more than 25 per cent. The buy now pay later company marked its first birthday as a listed entity by announcing it was ready to launch in the US after appointing key executives. The company also reported record November trading. Total transactions increased to $35.7 million from a previous record of $25.8 million. The share price jumped 25.5 per cent to $2.71.
Not today: Minerals explorer Estrella Resources (ASX:ESR) lost a quarter of its market value after the latest drilling assays fell short of elevated expectations. The share price more than quintupled back in October when the company struck massive nickel sulphides at Carr Boyd, north of Kalgoorlie. Shares fell 25.5 per cent this morning, trading below that day’s closing price for the first time in two months. CEO Chris Dawes insisted all was not lost: “I fully believe we have not seen the best of it yet,” he said. Assay results were pending on numerous holes.
