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A broad rally lifted the share market towards a fourth straight advance and its highest level in two weeks.
The S&P/ASX 200 climbed 44 points or 0.63 per cent by mid-session. The index rose as high as 7101.1, its strongest level since May 11, before easing to 7089.
Seventeen of the market’s 20 largest companies advanced. Commonwealth Bank and Aristocrat Leisure hit new records. Ten of eleven sectors rose.
What’s driving the market
Equity markets in the US and Europe advanced overnight as cryptocurrencies rebounded, US treasury yields declined and a weakening greenback boosted crude and metals. The S&P 500 gained 0.99 per cent. The Nasdaq Composite put on 1.41 per cent as falling yields encouraged traders to rotate into high-growth stocks.
“There were no major news flows or data releases affecting markets overnight with the pickup in risk sentiment attributed to an ease over inflation concerns,” NAB Currency Strategist Rodrigo Catril said. “Markets appear to be coming around to the [US Federal Reserve] narrative that a burst in inflation is only likely to be temporary and therefore should not be a concern. A temporary spike in prices should not instigate a removal of stimulatory policies from Central Banks.”
Rate-sensitive growth stocks and bond proxies rallied here as the Australian ten-year yield dipped a basis point to 1.643 per cent, its lowest in two weeks. REITs, telecoms and healthcare were among the leaders. The tech sector touched a two-week high.
Mining and energy stocks advanced as commodity prices recovered from a China-driven slump. China’s National Development and Reform Commission summoned mining leaders on the weekend and warned them the government will show “zero tolerance” for hoarding or any other market manipulation.
“The warning from Chinese officials triggered a sell-off in metals and bulk commodities with steel and iron ore prices falling during our session yesterday, but prices stabilised overnight edging a little bit higher before the close. Although some of the rise in commodity prices has been driven by speculators, there is also a genuine increase in demand as the global economy reopens,” Mr Catril said.
Going up
Fortescue Metals led a rebound in the mining majors from multi-week lows, rising 1.97 per cent. Rio Tinto gained 1.46 per cent. BHP put on 1.24 per cent. Lower down the food chain, Pilbara Minerals gained 4.47 per cent, Beach Energy 2.81 per cent and South32 2.13 per cent.
Tech gains were broad but mostly modest as the sector climbed for a fourth session. Afterpay gained 0.51 per cent, Altium 0.78 per cent and Appen 0.37 per cent.
Travel stocks took a fresh round of Melbourne Covid restrictions in their stride. The Victorian government this morning announced the reintroduction of limited restrictions from 6 pm tonight until at least June 4 after a fifth person tested positive. Masks will become mandatory indoors. Private and public gatherings will be limited.
Travel companies have been prone to sell-offs on negative Covid news, but mostly held their ground this session. Webjet climbed 1.43 per cent to a three-week high. Corporate Travel Management rose 2.04 per cent and Sydney Airport 0.26 per cent. Qantas dipped 0.64 per cent. Flight Centre eased 0.56 per cent.
Macquarie was the best of the financial heavyweights, rising 2.34 per cent. CBA added 0.43 per cent, ANZ 0.82 per cent, NAB 0.64 per cent and Westpac 0.64 per cent.
High-flying Aristocrat Leisure ascended 1.06 per cent to a new peak. Other notable gains at the market’s pointy end included Goodman Group +1.17 per cent, CSL +0.6 per cent and Brambles +0.71 per cent.
Software-as-a-service provider Technology One was briefly among the morning’s best performers after reporting a 48 per cent jump in half-year net profit to a record $28.2 million. The share price hit its strongest level this month before trimming its rise to 0.78 per cent.
Going down
Heavyweight declines were modest. Telstra dipped 0.44 per cent, Wesfarmers 0.13 per cent and Newcrest 0.11 per cent.
Gold stocks filled most of the lower slots on the index following a retreat in precious metals this morning. Gold was lately down $8.40 or 0.45 per cent at US$1,876.10 an ounce as the US dollar came off its low and Bitcoin turned negative. Here, Resolute Mining sagged 6.69 per cent, Gold Road Resources 3.24 per cent and Westgold 2.2 per cent.
Nuix shed 3.02 per cent, Fisher & Paykel Healthcare 2.99 per cent and Seven West Media 2.38 per cent.
Other markets
The Asia Dow advanced 0.65 per cent. China’s Shanghai Composite tacked on 1.3 per cent, Hong Kong’s Hang Seng 0.99 per cent and Japan’s Nikkei 0.62 per cent.
S&P 500 futures rose six points or 0.14 per cent.
Oil built on last night’s gains. Brent crude improved 21 cents or 0.31 per cent to US$68.58 a barrel.
The dollar inched up 0.06 per cent to 77.55 US cents.
