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Australian shares rose for the first time in eight sessions as the Reserve Bank soothed interest rate worries and a Wall Street holiday acted as a circuit-breaker to the downward spiral in global equities.

The S&P/ASX 200 rallied 91 points or 1.41 per cent by mid-session. The index shed almost 700 points over the last week and a half.

Yesterday’s worst performers, miners and energy producers, rebounded. Bank stocks also rose. Several defensive sectors retreated.

Buyers were encouraged when Reserve Bank Governor Philip Lowe dismissed the threat of a 75 basis-points increase in interest rates next month.

What’s driving the market

The mood on financial markets improved overnight as European stocks clawed back some of last week’s heavy losses, and volatility in cryptocurrencies abated.

With trade in the US suspended for the Juneteenth long weekend, the pan-European Stoxx 600 rose 0.96 per cent. Bitcoin regained the psychologically-significant US$20,000 level after trading as low as US$17,630 over the weekend.

“Risk sentiment is somewhat improved, with US futures up 1% and European stock markets similarly so, while bond yields are up +/- 10bps at 10 years in Europe,” NAB’s head of FX strategy, Ray Attrill, said.

US futures followed Europe higher. S&P 500 futures were ahead 51 points or 1.4 per cent near the halfway mark of the Australian session.

Australian buyers were reassured by confirmation the Reserve Bank was unlikely to raise the cash rate target by 75 basis points next month. Governor Lowe told a Sydney event this morning board discussions would centre around whether to lift by 25 or 50 points.

Lowe also said he did not see a risk of recession in Australia in coming months. Inflation is expected to peak near 7 per cent in the December quarter, then decline.

“The Board is committed to doing what is necessary to ensure that inflation returns to the 2 to 3 per cent target range over time. High inflation damages the economy, reduces the purchasing power of people’s incomes and devalues people’s savings,” Lowe said.  

“Australians should be prepared for more interest rate increases. The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation,” he added.

Consumer confidence improved a fraction last week, but remained near two-year lows. The ANZ-Roy Morgan confidence index edged up 1.6 per cent, reclaiming a fraction of the previous week’s 7.6 per cent slide. Across the pond, Westpac’s New Zealand confidence index hit a record low.

Going up

Mining and energy stocks rebounded after key commodity prices recovered overnight. Uranium miner Paladin Energy bounced 8.85 per cent, coal miner Whitehaven 7.49 per cent and nickel-gold miner Chalice 5.66 per cent.

Diversified miner OZ Minerals gained 6.01 per cent. Beach Energy put on 4.03 per cent. Nickel Industries added 6.03 per cent.

Among the heavyweights, Fortescue Metals firmed 2.94 per cent, Woodside Energy 2.8 per cent and Rio Tinto 2.74 per cent.

The high-street banks pushed for their biggest rise in more than a month after the financial sector spearheaded gains in Europe. NAB put on 2.76 per cent, Westpac 2.14 per cent, ANZ 1.99 per cent and CBA 1.3 per cent.

Confirmation of full-year guidance lifted GrainCorp 3.91 per cent. The agribusiness expects to increase earnings by 90 per cent this year.

Australian Agricultural Company edged up 0.89 per cent despite news Managing Director and CEO Hugh Killen will stand down after four years at the helm. Chief Operating Officer Dave Harris will act as CEO until a permanent replacement is found.

Explorer Lode Resources briefly doubled in value after intersecting high-grade silver-lead-zinc-copper mineralisation at shallow depths at its Tangoa West prospect in NSW. The share price jumped from 15 cents yesterday to 34 cents before paring its advance to 24.5 cents, a gain of 63.33 per cent.

Going down

Healthcare and property companies eased as investors favoured sectors with more upside in a market recovery. CSL dropped 0.77 per cent, Sonic Healthcare 1.83 per cent and Cochlear 1.5 per cent.

Goodman Group retreated 1.1 per cent, Stockland 1.9 per cent and Centuria REIT 1.02 per cent.

Digital health firm ResApp slumped 25.71 per cent after test results of its Covid-19 smartphone algorithm failed to meet the terms of an increased takeover offer from global giant Pfizer. The Data Confirmation Study produced results below the thresholds, meaning conditions for an offer of 20.7 cents per share were not met. Instead, ResApp said shareholders will receive a lower offer of 14.6 cents per share.

Premier Investments dropped 3.08 per cent as its shares traded without the right to the latest dividend.

Other markets

A strong morning on Asian markets saw the Asia Dow put on 1.5 per cent, Hong Kong’s Hang Seng 1.02 per cent and Japan’s Nikkei 1.76 per cent. China’s Shanghai Composite trailled with a slim gain of 0.07 per cent.

Oil added to last night’s gains. Brent crude rose US$1.56 or 1.37 per cent to US$115.69 a barrel.

Gold improved US$3.20 or 0.2 per cent to US$1,843.80 an ounce.

The dollar climbed 0.07 per cent to 69.72 US cents.

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