A third day of gains propelled the stock market to its highest this month ahead of reports this week on US inflation and Australian employment.
The S&P/ASX 200 climbed 70 points or 1.02 per cent to 6964.5. The rally extended the Australian benchmark’s recovery since Wednesday’s seven-week low to 235 points or 3.5 per cent.
Ten of eleven sectors advanced. Mining and consumer stocks set the pace. Healthcare was the only laggard as buyers favoured sectors with more upside in a recovery.
What moved the market
The ASX 200 closed at its highest since August 31, boosted by a bullish end to last week on Wall Street and commodity markets. The S&P 500 popped 1.53 per cent on Friday despite the long shadows cast by tomorrow night’s consumer inflation report, Thursday’s retail sales update and next week’s Federal Reserve interest rate decision.
“This week’s key data of US CPI and Retail Sales are capable of becoming significant catalysts for fresh trend development in either direction. It is likely stocks will continue to drift higher into Tuesday’s CPI data, which may well see further improvement as petrol prices have continued to pull back,” Clifford Bennett, chief economist at ACY Securities, said.
“The market… could rally further afterwards even if inflation remains high. Many in the market still choose to favour the idea that all the bad news is already priced in, so the market can rally anyway.”
Miners led on the ASX today after industrial metals had their best week since July. Iron ore climbed 7.4 per cent in China last week amid further measures to spur infrastructure spending. Oil and gold also rose as the US dollar backed off two-decade highs.
Employment data on Thursday will carry implications for the interest rate outlook.
“Employment on Thursday is this week’s domestic highlight and will be watched closely to see whether it supports a downshift in the pace of rate hikes to 25bp increments as Governor Lowe hinted at in his Anika Foundation speech. NAB sees employment bouncing back by 40k after last month’s sample-affected read of -40.9k (consensus +30k), and for the unemployment rate to fall a tenth to 3.3% (consensus 3.4%),” NAB currency strategist Rodrigo Catril said.
Winners’ circle
Gold miners filled two of the top three slots on the index as the sub-sector built on last week’s rebound from near four-year lows. The yellow metal nudged up 0.5 per cent on Friday after an important support level held last week.
De Grey rallied 5.07 per cent. Gold Road Resources put on 5.15 per cent. Industry giant Newcrest inched up 0.45 per cent.
Growth stocks continued to benefit from the improvement in risk appetite. Afterpay parent Block popped 4.94 per cent, Megaport 3.97 per cent and NextDC 3.54 per cent.
A resource upgrade and a jump in nickel prices lifted Nickel Industries 6.7 per cent. IGO Ltd climbed 2.31 per cent to its highest level since April.
BHP was the pick of the index heavyweights, rising 3.47 per cent. Fortescue Metals tacked on 3.31 per cent, James Hardie 1.97 per cent and Macquarie Group 1.82 per cent.
Synlait firmed 0.96 per cent after Chinese authorities renewed the firm’s licence to manufacture and sell A2 Milk’s infant formula until February 2023. A2 Milk gained 2.52 per cent.
Doghouse
Liontown Resources eased 3.05 per cent after appointing independent producer Zenith Energy to supply electricity to Liontown’s Kathleen Valley lithium project. The power project is expected to be the largest off-grid wind-solar-battery storage hybrid power station in Australia.
MA Financial Group plunged 21.76 per cent amid fears a federal government review of the immigration system could generate changes that impact the firm’s funds under management. MAF said 15 per cent of gross fund inflows into its asset management business in the first eight months of its reporting year came from clients under migration-related programmes. The company reaffirmed its full-year guidance.
Toll road operator Atlas Arteria retreated 2.13 per cent after acknowledging interest in bidding for a US toll road. The company said it was participating in the sales process for the Chicago Skyway, but there was no certainty a transaction would eventuate.
Santos slipped 1.78 per cent following media speculation major shareholder ENN was looking to sell down its stake. The firm noted ENN reduced its holding earlier this year from 9.97 per cent to less than 5 per cent.
Other heavyweight drags included CSL -0.78 per cent and Woolworths -0.22 per cent.
Other markets
Asian markets followed Wall Street’s lead. The Asia Dow climbed 0.34 per cent. Japan’s Nikkei rallied 1.04 per cent. Markets in Hong Kong and mainland China were closed for public holidays.
US futures pared early gains. S&P 500 futures were recently ahead one point or 0.03 per cent.
Oil started the week on the back foot. Brent crude reversed $US1.30 or 1.4 per cent to US$91.54 a barrel.
Gold eased US$5.80 or 0.34 per cent to US$1,722.80 an ounce.
The dollar declined 0.1 per cent to 68.4 US cents.