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A broad rally propelled the share market towards a third day of gains as easing commodity prices and weak economic signals soothed fears about global inflationary pressures.

The S&P/ASX 200 jumped 116 points or 1.76 per cent by mid-session.

All 11 sectors rose, led by strong gains in banking, mining and consumer stocks. Gold miners were among the biggest weights following a string of production warnings in recent days.

What’s driving the market

Wall Street logged its biggest rise in more than two years on Friday amid speculation interest rates may not rise as high this year as previously anticipated. The S&P 500 soared 3.06 per cent, extending its gain for the week to 6.5 per cent. The Dow and Nasdaq Composite bounced 5.4 and 7.5 per cent for the week, respectively.

Market interest rate pricing declined last week as commodity prices retreated and consumer confidence hit an all-time low.

“Market conviction that perhaps the Fed won’t now hike rates as aggressively as previously feared and/or that rates cuts before the end of 2023 are now an even more realistic prospect if recession-like conditions lay ahead, have had a big hand in last week’s improvement in risk sentiment and which has now seen about two-thirds of the June 9-16 sell-off walked back,” NAB’s head of FX strategy, Ray Attrill, said.

However, the argument that bad news for the economy = good news for stocks did not sway all economists.

“The market was simply oversold in the short term. Meaning, that it had got ahead of itself, just for the moment, in terms of pricing in aggressive rate hikes and a looming recession,” Clifford Bennett, chief economist at ACY Securities, said.

“The market was vulnerable to some short position squaring, and then bulls looking to buy the bottom, combined to deliver a rock star day!”

Bennett does not expect the global rebound to last. His advice to investors is to use the current rebound to reduce their exposure.

“The argument that weakening economic data is now somehow a good thing for stocks is… entirely a misplaced and a false premise,” he said.

“We have argued for defensive play since the first week of the year and continue to do so. Hopefully this rally in equity markets gains a little more traction for better levels to exit longs, but at any point where the market begins to fall back in on itself, I would not be slow in selling yet again,” he added.

Going up

Roughly nine out of every ten stocks on the ASX 200 rose. Lithium miners filled most of the top slots in an extension of Friday’s sharp sector rebound. Core Lithium climbed 13.11 per cent. Lake Resources added 9.32 per cent. Liontown firmed 8.72 per cent.

At the pointy end of the mining spectrum, Fortescue Metals bounced 4.28 per cent, BHP 4.2per cent and Rio Tinto 2.89 per cent.

Energy was another standout after Brent crude recouped losses through the first half of last week. Beach Energy advanced 4.57 per cent, Woodside 2.4 per cent and Santos 2.29 per cent. The high-street banks tacked on between 2.4 and 3.1 per cent.

Positive results from a trial of an experimental treatment for advanced gastric cancer lifted Imugene 31.82 per cent. Trial analysis showed the firm’s HER-Vaxx treatment reduced risk of death in chemotherapy patients with no added toxicity.

An 18.6 per cent bounce in full-year underlying profit boosted Metcash 3.63 per cent. A shift in consumer behaviour contributed to “strong sales and earnings” for the operator of the IGA chain of convenience stores. Revenues increased 5.9 per cent and underlying earnings by 171.7 per cent.

“The Group’s significant lift in earnings and strong financial position led to a ~23% increase in total dividends for FY22, representing a 72% increase on a two-year basis.,” Group CEO Doug Jones said.

“Importantly, sales momentum has continued into FY23 with Group sales up ~9% in the first seven weeks of the year and growth in all pillars, partly buoyed by the impact of inflation.”

Insurer Suncorp gained 3.64 per cent after confirming media reports it was exploring a sale of its banking operations.

Link Administration climbed 3.25 per cent to $3.81 after suitor Dye & Durham slashed its acquisition offer price from $5.50 per share to $4.30. The Canadian legal software provider reduced its bid to reflect “the current state of the financial markets and values of both the Link Group and the PEXA shares”.

A 5.6 per cent independent revaluation of its property portfolio helped lift Charter Hall Social Infrastructure REIT 0.43 per cent. The trust will distribute 4.4 cents per unit for the quarter.

Carsales.com entered a trading halt to raise funds to acquire the 51 per cent of US marketplace platform Trader Interactive it does not already own.

Going down

Gold miners were the biggest drag after a costs and production warning from Evolution Mining continued a run of disappointing updates from ASX miners over the last week.

The firm said wet weather and Covid-induced labour shortages would affect production. Output for the next two financial years would be lower than previously advised. The share price dived 20.27 per cent.

Also weak were Northern Star -10.39 per cent, Newcrest -4.51 per cent and Ramelius Resources -6.4 per cent.

A copper production cut dragged OZ Minerals down 2.5 per cent. The miner reduced its copper guidance by 13 per cent and warned of higher costs due to lower volumes, labour shortages and inflation.

Project delays due to bad weather and labour and materials shortages knocked modular buildings manufacturer Fleetwood down 18.9 per cent. The company warned delays and cost increases would cap second-half earnings at the same level as the first half.

Zip Co dipped 4.67 per cent on news almost 175,000 shares will be released from escrow on July 3.

Other markets

A strong session on Asian markets saw the Asia Dow rise 1.94 per cent, China’s Shanghai Composite 0.99 per cent, Hong Kong’s Hang Seng 2.27 per cent and Japan’s Nikkei 1.03 per cent.

US futures reversed early weakness. S&P 500 futures were recently ahead five points or 0.18 per cent.

Oil added to Friday’s 2.8 per cent rally. Brent crude rose 59 US cents or 0.5 per cent to US$109.69 a barrel.

Gold bounced US$7.40 or 0.4 per cent to US$1,837.70 an ounce.

The dollar dipped 0.1 per cent to 69.37 US cents.

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