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Gains in mining and bank stocks helped the share market trim its loss for the week despite pressure on BNPL players facing a US regulatory crackdown.  

The S&P/ASX 200 rallied 42 points or 0.58 per cent towards its first gain in four sessions. The advance cut the index’s loss for the week to 16 points.

Overnight gains in iron ore and metals lifted the major miners. CBA led a revival in the major banks following a week of low-key general meetings.

Afterpay, Z1P Co and other payments companies wilted after the US consumer watchdog launched an inquiry into the buy now, pay later sector.

What’s driving the market

The local market took overnight weakness on Wall Street in its stride as bulk metal miners responded to an eight-week high in iron ore and strong gains in industrial metals.

Copper jumped 3.4 per cent on the London Metal Exchange after a major Peruvian mine closed. Zinc surged 5.2 per cent, nickel 3 per cent and aluminium 2.8 per cent  The spot price for ore landed at Tianjin climbed 4.6 per cent.

“Iron ore futures gained as signs of higher China steel production emerged. Crude steel output in the first 10 days of December climbed 12% from a month earlier, according to China Iron & Steel Association. This is in line with our expectations of rise as the country meets its target of 1.03bn tonnes in 2021,” ANZ’s senior commodity strategist Daniel Hynes said.

BHP rose 1.38 per cent, Fortescue Metals 0.74 per cent and Rio Tinto 0.41 per cent. Champion Iron added 4.26 per cent, Nickel Mines 3.75 per cent and Chalice Mining 2.86 per cent.

Gold was another standout as a falling US dollar helped lift the yellow metal to a three-week high. Northern Star put on 5.81 per cent, St Barbara 5.42 per cent and Perseus 4.93 per cent. Industry powerhouse Newcrest jumped 4.61 per cent.

“The surge in gold prices can be credited to the much-anticipated Fed’s bond tapering announcement, which was just a bit more hawkish than market expectations. It seems that investors are hedging the potential economic risks from the Omicron variant via safe-haven assets,” Kalkine Group CEO Kunal Sawhney said.

US stocks declined overnight as investors reassessed the impact of higher rates next year on balance sheets. The S&P 500 dropped 0.87 per cent. The high-growth Nasdaq Composite skidded 2.47 per cent.

“The Nasdaq Composite recorded its worst day in the last 11 weeks,” Kalkine’s Sawhney said. “The pullback in the stock market was primarily driven by the technology shares that slid as investors evaluated central banks’ moves to fight rising inflation.

“Investors assessed monetary policy moves by global central banks after the Fed’s decision to accelerate the wind-down of its bond-buying program and pencil in interest rate hikes for 2022. The hawkish stance from the Fed has emerged to control rising inflationary pressures, which could eventually prompt a deceleration in consumer spending and crimp economic growth.”

Going up

NAB told shareholders to expect a better year in 2022. At today’s AGM, Chair Philip Chronican said the bank had good momentum across all businesses and would look to return surplus capital to shareholders. The share price rose 0.45 per cent.

“I am cautiously optimistic that the worst of the economic impact of COVID-19 is behind us,” Mr Chronican said. “I am confident the Australian economy will rebound in 2022, with the protection of having one of the highest rates of vaccination in the world and a booster program now underway.”

CBA gained 2.37 per cent, ANZ 0.91 per cent and Westpac 0.64 per cent.

Other heavyweights to advance included Woodside +1.88 per cent, Wesfarmers +1.07 per cent and Woolworths +0.59 per cent.

Aside from gold stocks, the session’s best performers were UK lender Virgin Money +5.42 per cent, coal miner Whitehaven +5.42 per cent and fruit and veg wholesaler Costa Group +4.3 per cent.

Going down

BNPL stocks dived after the US’s Consumer Financial Protection Bureau issued orders to five companies, including Afterpay and Z1P Co, seeking more information on the risks of the loan model. The US watchdog said it was worried about “accumulating debt, regulatory arbitrage, and data harvesting”.

Afterpay said it welcomed the inquiry, but saw its shares plunge 6.91 per cent to a seven-month low. Z1P Co shed 4.49 per cent, Sezzle 6.5 per cent and Openpay Group 5.56 per cent.

EML Payments lost 2.3 per cent following media reports of a class action alleging the payments company failed to advise shareholders promptly about regulatory issues in Ireland. The company said it had not been served with proceedings, but would defend itself.

Transurban declined 0.51 per cent after reaching a deal with the Victorian government to build the West Gate Tunnel Project in Melbourne. The toll road operator and state will split extra costs of $3.4 billion equally.

“We recognise this situation has been disappointing, however we believe this agreement represents the best path forward to deliver the West Gate Tunnel Project in the interests of all stakeholders,” CEO Scott Charlton said.

This week’s flurry of takeover activity in the healthcare sector continued with acquisitions by Sonic Healthcare and Healius. Sonic eased 2.03 per cent after announcing it had acquired US pathology company ProPath for an undisclosed sum. Healius retreated 1.99 per cent after buying bioanalytical laboratory Agilex Biolabs for $301.3 million.

CSL held near yesterday’s capital raising price after raising a mammoth $6.3 billion to fund the acquisition of Swiss firm Vifor Pharma. Shares in the biotech were lately up six cents or 0.02 per cent at US$273.06.

High-growth tech firms declined in the wake of last night’s US selling on the Nasdaq. Life360 fell 5.8 per cent, Megaport 4.38 per cent and Xero 3.94 per cent.

Other markets

Asian markets followed Wall Street lower. The Asia Dow shed 0.35 per cent, China’s Shanghai Composite 0.13 per cent, Hong Kong’s Hang Seng 0.53 per cent and Japan’s Nikkei 1.02 per cent.

S&P 500 futures bounced five points or 0.1 per cent.

Oil eased back from a three-week peak. Brent crude declined 17 US cents or 0.23 per cent to US$74.85 a barrel.

Gold added to last night’s gains, rising US$1.70 or 0.1 per cent to US$1,799.90 an ounce.

The dollar edged up 0.05 per cent to 71.79 US cents.

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