The share market logged its strongest rise in more than two weeks after a rebound on Wall Street encouraged buyers ahead of a likely interest rate rise tomorrow.
The S&P/ASX 200 rallied 45 points or 0.62 per cent. Today’s advance was the largest since a 58-point jump on February 16. At 7328.6, the close was the strongest in almost a fortnight.
Gains in consumer, tech and property stocks helped offset weakness in bulk metal miners as iron ore markets reacted negatively to a lower-than-expected economic growth target in China.
What moved the market
The prospect of a record tenth straight interest rate hike tomorrow failed to discourage bargain-hunters picking up stocks near six-week lows. Rate-sensitive sectors led the rally as bond yields here and in the US backed off recent highs.
The yield on ten-year Australian government bonds sank 14 points this afternoon to 3.78 per cent. The retreat came as US yields added to Friday’s fall. Ten-year US yields moved another two basis points today further from the closely-watched 4 per cent level breached last week. The ten-year yield was lately at 3.94 per cent.
Share prices and bond yields have moved inversely this year. Stocks surged through January as yields declined, then sank in February as the prospect of higher rates for longer reignited the yield rally.
Tech and real estate stocks led today’s ASX advance. Both sectors are highly sensitive to fluctuations in the cost of borrowing.
US stocks rose on Friday after the ten-year US treasury yield backed off the 4 per cent level. A 1.61 per cent rally in S&P 500 helped break a three-week losing streak. The Dow climbed 1.17 per cent on the day and 1.75 per cent during its first winning week in five.
Winners’ circle
Retailers rallied ahead of tomorrow’s rates call. Harvey Norman bounced 2.7 per cent from an eight-month low. Super Retail Group gained 3.07 per cent, Lovisa 2.46 per cent and Wesfarmers 2.41 per cent.
Rate-sensitive technology was the session’s second-best performing sector. Afterpay owner Block climbed 5.5 per cent, Megaport 4.36 per cent, Xero 3.77 per cent and Hub24 4.73 per cent.
BrainChip soared 16.67 per cent after launching the second generation of its platform for AI development. The firm said the new generation Akida platform would allow designers and developers to incorporate features that were previously not possible.
Core Lithium surged 6.25 per cent after more than doubling the estimated resource at its second proposed lithium mine in the Northern Territory. The miner hiked the mineral resource estimate at the BP33 deposit at its Finiss project from 4.37 Mt at 1.53 per cent lithium oxide to 10.1 Mt at 1.48 per cent following drilling results.
Fellow battery metal-focussed firms Lake Resources and Liontown gained 6.61 and 5.52 per cent, respectively.
The big banks continued to recover from last week’s multi-month lows. NAB put on 1.13 per cent, rising for a second day. ANZ added 1.47 per cent, Westpac 1.66 per cent and CBA 0.87 per cent.
Other heavyweight gains included James Hardie +3.35 per cent, Macquarie Group +2.44 per cent and Aristocrat Leisure +1.66 per cent.
Industrial landlord Goodman Group firmed 2.14 per cent. HMC Capital added 3.19 per cent, Vicinity Centres 2.14 per cent and Mirvac 2.29 per cent.
Fund manager Magellan climbed 2.3 per cent despite further outflows. Total funds under management shrank to $45.4 billion last month from $46.2 billion in January.
GQG Partners gained 1.38 per cent after reporting net inflows of $3 billion for the first two months of the year.
Doghouse
Most bulk metal miners declined for the first time in five sessions as iron ore eased from Friday’s eight-month high. Ore futures on China’s Dalian Commodity Exchange retreated 2.8 per cent this afternoon after China set an economic growth target below consensus expectations.
Premier Li Keqiang yesterday announced a GDP target of “around 5 per cent”. The average forecast among economists polled by CNBC was for growth of 5.24 per cent.
Fortescue Metals reversed 2.46 per cent. Rio Tinto lost 0.84 per cent. BHP swung to a slender gain of 0.14 per cent.
AMP eased 1.9 per cent after the exchange operator queried its continuous disclosure practices. The ASX sent the firm a ‘Please explain’ letter in regards to an interim earnings result last month that sent the share price down 13.36 per cent. The investment manager said the market reaction was partly due to some analysts failing to update their earnings estimates to reflect an earlier AMP announcement about impairments within the result.
“Had all sell-side analysts updated their models, AMP’s reported statutory NPAT would have been approximately 5% lower than the consensus estimate,” the company said.
Nitro Software shed 0.46 per cent after a takeover offer lapsed, leaving one suitor still in the race. Alludo’s offer of $2.15 per share lapsed, leaving Potentia’s $2.17 per proposal offer the only offer on the table. The Nitro board recommended shareholders accept Potentia’s offer.
Cash Converters was unchanged after buying the UK’s largest unlisted pawnbroker. The Australian firm will pay $24.7 million to acquire Capital Cash, which operates 42 franchise stores in the UK.
Other markets
Asian markets were mixed. The Asia Dow tacked on 1.23 per cent. Japan’s Nikkei added 1.17 per cent. Hong Kong’s Hang Seng per cent edged up 0.04 per cent. China’s Shanghai Composite gave up 0.24 per cent.
S&P 500 futures overcame early weakness to advance six points or 0.14 per cent.
Oil gave back more than half of Friday’s rally. Brent crude declined 81 US cents or 0.9 per cent to US$85.02 a barrel.
Gold added to last week’s 2.1 per cent rebound. The yellow metal firmed US$6 or 0.3 per cent to US$1,860.60 an ounce.
The dollar inched up 0.05 per cent to 67.57 US cents.