The share market recorded its biggest rise in more than two weeks as US negotiators worked into the night on a stimulus package for the American economy.
The S&P/ASX 200 rose 48 points or 0.7 per cent, broadly mirroring overnight gains on Wall Street.
Despite a late fade, today’s advance was the local index’s best since a 71-point burst on December 1. The rally raised hopes of a late ‘Santa rally’ in the run in to Christmas.
What moved the market
US stocks surged overnight amid signs a divided Congress was finally getting serious about a stimulus deal. The S&P 500 climbed 1.29 per cent. The Dow Jones Industrial Average put on 1.13 per cent.
After months of stalemate, Congressional leaders huddled as the clock ran down on funding for the government and unemployment benefits for millions of Americans. Funding for the federal government is due to expire on Saturday. Twelve million Americans will lose their benefits on Boxing Day unless a new bill is approved.
The four highest ranking politicians in Congress met twice today and remained on Capitol Hill long into the American night. Treasury Secretary Steven Mnuchin took part in discussions.
House Speaker Nancy Pelosi left shortly before the end of the Australian trading day. “Tomorrow, we’ll be back early and we’ll be on schedule to get the job done,” she told reporters.
Senate Majority Leader Mitch McConnell said they had made significant progress and he was optimistic they would reach a deal soon.
US futures drifted two points or less than 0.1 per cent as investors held fire until they saw if there was action behind the talk.
Winners’ circle
Nine of 11 sectors advanced during a broad-based rally. The technology sector set the pace with a rise of 2.6 per cent as sector leaders Afterpay and Xero closed at records. Afterpay put on 4.2 per cent. Xero added 2.2 per cent.
A tentative rebound in iron ore lifted the materials sector. Fortescue Metals climbed 2.3 per cent, BHP 1.8 per cent and Rio Tinto 1.7 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 1.4 per cent after CEO Shayne Elliott told today’s AGM 92 per cent of customers that deferred home loan repayments had resumed paying. Chair Paul O’Sullivan said the company will consider raising dividend payments next year after the regulator, APRA, lifted restrictions.
A busy news day for the banks saw NAB put on 1 per cent after striking a deal to sell its New Zealand life insurance business to NZ provider Partners Life for NZ$290 million. CBA announced it will merge its Aussie Home Loans business with online home loan platform Lendi. CBA shares ticked up 0.9 per cent. Westpac added 0.8 per cent.
Other heavyweight movers included Transurban +1.4 per cent, Brambles +0.8 per cent and Woolworths +0.8 per cent. Wesfarmers inched up 0.2 per cent to a new closing high.
Resolute Mining was the index’s best performer during a strong session for gold stocks. Resolute shares jumped 10.3 per cent on news the miner sold its Bibiani mine in Ghana to a Chinese miner for $105 million. Perseus Mining rose 7 per cent, Gold Road Resources 5.4 per cent and Newcrest 1 per cent.
Doghouse
Health stocks faded as the session wore on. A rise in US bond yields overnight dulled the appeal of other yield assets. CSL dipped 1 per cent, Sonic Healthcare 0.2 per cent and Ramsay 0.4 per cent.
The energy sector also ran out of puff, surrendering earlier gains as crude eased from a nine-month peak. Woodside was the only stock in the top seven to advance, rising 0.8 per cent. Ampol fell 1.6 per cent, Santos 1.1 per cent and Oil Search 0.8 per cent.
Service Stream was the index’s worst performer, tanking 12.1 per cent as investors thumbed down the network services company’s new deal with nbn Co. 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 8.6 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.
Other markets
Asian markets made mostly modest advances. China’s Shanghai Composite and Japan’s Nikkei gained 0.2 per cent. Hong Kong’s Hang Seng put on 0.8 per cent.
Oil retreated from an overnight nine-month high. Brent crude dipped eight cents or 0.2 per cent to $US50.68 a barrel. Gold rose $5.10 or 0.3 per cent to $US1,860.40 an ounce.
The dollar edged up 0.07 per cent to 75.63 US cents.
Hot today and not today
Hot today: Emerge Gaming (ASX:EM1) jumped 28.4 per cent as investors grew more confident in the online gaming platform’s growth outlook. Two days after announcing 50,000 subscribers for its MIGGSTER social gaming platform, the company announced its MTN Arena platform in South Africa had passed 80,000 subscribers. MTN Arena charges subscribers around $7.80 a month.
Not today: Minerals explorer Estrella Resources (ASX:ESR) lost almost 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 22.5 per cent today, ending 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.