A “risk-on” morning saw Australian shares climb for a second day amid hopes for economic renewal as states loosen lockdown restrictions.
The S&P/ASX 200 rose 68 points or 1.3 per cent by mid-session. Energy, industrial and bank stocks set the pace. Telecoms, consumer staples and healthcare lagged.
The gains followed a strong end to trade last week in the US and positive steps around the country to revive the economy. Victoria this morning announced the first easing of the nation’s toughest restrictions, declaring up to five visitors would be allowed into homes from midnight tomorrow. Children in New South Wales and Queensland began a staged return to classrooms this morning. Providers of regional accommodation in South Australia were permitted to reopen from today. Cafes and restaurants in NSW will be allowed to reopen from Friday. Workers in Western Australia will be able to return to workplaces from next Monday. Tasmania, the ACT and Northern Territory have also relaxed restrictions in recent days.
The stock market recovery in the US is well advanced, with the S&P 500 firing up 49 points or 1.69 per cent on Friday to extend its bounce off its pandemic low to 30 per cent. By contrast, the S&P/ASX 200 at the start of this session had rebounded just 22.5 per cent from its low. Part of the performance gap can be explained by the Australian market’s heavy weighting of bank and mining stocks exposed to the effects of the COVID-19 pandemic. The US has fared better in part due to the strength of businesses such as Amazon, Alphabet and Apple that were better positioned to weather the storm.
The Australian industrial sector lost almost 44 per cent of its value during the downturn, but this morning recouped 2.1 per cent as bargain-hunters picked through the wreckage for recovery plays. Qantas climbed 3.1 per cent, toll group Transurban climbed 1.7 per cent, global supply-chain logistics firm Brambles 2 per cent and Sydney Airport 3.3 per cent.
The energy sector was hit even harder, losing almost 60 per cent of its value since January as demand for oil collapsed. The sector gained 2.2 per cent this morning as Oil Search added 3.8 per cent, Santos 2.3 per cent and Woodside 2.6 per cent. The gains came even as oil started a new week on the back foot. Brent crude slumped 43 cents or 1.4 per cent to $US30.54 a barrel.
Travel companies made the list of the index’s best performers. Online travel agent Webjet soared 21.3 per cent and Flight Centre 8.6 per cent. Graphite miner Syrah Resources put on 15.1 per cent and media groups Southern Cross 14.8 per cent and Seven West 9.3 per cent.. Afterpay rose 5.8 per cent to an all-time high.
Macquarie Group jumped 5.7 per cent following a broker upgrade and news of a proposal to raise $400 million by issuing capital notes. CBA gained 1.2 per cent and ANZ and Westpac 0.8 per cent. NAB declined 0.5 per cent.
While all 11 sectors made headway, the consumer staples sector gained just 0.2 per cent and telecoms 0.6 per cent as traders favoured companies with greater exposure to an economic recovery. Telstra gained 0.8 per cent and Woolworths 0.3 per cent. Coles dipped 0.3 per cent.
The renewed optimism sweeping global markets helped lift China’s Shanghai Composite 0.2 per cent this morning , Hong Kong’s Hang Seng 1.8 per cent and Japan’s Nikkei 1.4 per cent. S&P 500 index futures were recently ahead 14 points or 0.5 per cent.
Gold eased $3.20 or 0.2 per cent to $US1710.60 an ounce.
The dollar advanced 0.4 per cent to 65.56 US cents.
What’s hot today:
Uranium producers are back in vogue after a surge in prices dragged the sector out of the doldrums. The spot price has risen 41 per cent in six weeks amid supply concerns due to lockdown restrictions. The share price of TNT Mines (ASX:TIN) exploded this morning (sorry…) after the miner announced it had acquired a uranium-vanadium project in the US. The company hopes to cash in on the White House’s reported desire to reduce the US’s dependence on imported uranium. TIN’s share price lifted 269.6 per cent from 4.6 cents to 17 cents.