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Technology and yield stocks set the pace as the share market greeted summer with its first rise in four sessions.

The S&P/ASX 200 dipped briefly into the red following an end-of-month swoon on Wall Street before rebounding to a mid-session gain of 86 points or 1.3 per cent. The rally entirely reversed yesterday’s fall.

What’s driving the market

The market took half an hour to work through the last of the institutional portfolio rebalancing, then kicked firmly higher. A decline in the dollar encouraged investors into traditional yield stocks, including health, utilities and consumer staples.

Overnight weakness on Wall Street was quickly forgotten as US futures rebounded. S&P 500 index futures bounced 22 points or 0.6 per cent this morning. The index fell 0.46 per cent last night as investors locked in profits at the end of a strong month.

The Reserve Bank met this morning and was due to release a rate policy update at 2.30 pm AEDT. No major surprises were expected following last month’s fireworks. The central bank cut the cash rate to a record-low 0.1 per cent in November and significantly expanded its quantitative easing (QE) program.

“The RBA’s last meeting of the year should pass without incident unless the post-meeting Statement chooses to offer some guidance on the likely fate of its QE bond buying programme beyond its currently scheduled June 2021 expiry (unlikely),” NAB Head of FX Strategy Ray Attill said.

The dollar came under pressure over the last 24 hours after relations with China hit a new low. Prime Minister Scott Morrison demanded an apology after an official Chinese foreign ministry account tweeted an image of an Australian solider holding a knife to the throat of an Afghan child. The Aussie dived 0.6 per cent to 73.56 US cents.

Going up

‘Safety first’ appeared to be today’s motto following a month of extraordinary gains. Aside from technology, the dull, reliable end of the market outpaced more volatile sectors.

The top nine healthcare companies by market capitalisation rebounded from four days of sector decline. Sector giant CSL put on 1.3 per cent. Fisher & Paykel Healthcare rose 1.8 per cent to a three-week peak. Ramsay gained 3.7 per cent, Cochlear 2.3 per cent and Sonic 1.2 per cent.

Leading utilities APA Group and AGL Energy put on 2.3 per cent and 0.1 per cent, respectively. Supermarkets Coles and Woolworths added 2.2  and 1.9 per cent.

In the tech sector, Megaport gained 4 per cent, WiseTech 3.7 per cent and Appen 3.2 per cent.

The twin pillars of the market, financials and materials, advanced at a more sedate pace. CBA tacked on 1.4 per cent, ANZ 1.6 per cent, NAB 0.9 per cent and Westpac 1.2 per cent. Rio Tinto was the pick of the iron ore majors, rising 1.2 per cent. BHP gained 1 per cent. Goldminer Newcrest climbed 2.1 per cent.

Miner Sandfire Resources soared 10.5 per cent on a flurry of announcements that included a green light for a new copper mine in Botswana. The T3 Motheo Copper-Silver Project in the Kalahari Copper Belt is forecast to generate US$987 million in pre-tax earnings in its first ten years.

A production upgrade helped oil giant Santos resist a downturn in energy stocks. Shares rose 0.7 per cent after the company raised its 2020 guidance to 87-89 million barrels of oil from previous guidance of 83-88 million barrels.

Fast-food franchisor Collins Foods climbed 8 per cent on news revenues increased 11.3 per cent in the first half. Strong Australian demand for KFC outweighed pressure on European markets. A ratings upgrade from Goldman Sachs following yesterday’s investor day helped lift Domino’s Pizza 11 per cent. Goldman raised its rating to ‘Buy’.

Going down

Energy was the only sector to drag after an OPEC+ meeting ended without an official decision on crude production caps due to expire next month. Woodside Petroleum dropped 1.3 per cent. Cooper Energy shed 0.7 per cent.

GPT Group slid 0.11 per cent after selling its 25 per cent stake in Sydney CBD prestige office block 1 Farrer Place to Lendlease for $584.6 million. Lendlease shares rose 1.4 per cent.

Australia’s increasingly strained relations with China helped push English language education group IDP Education down 3.4 per cent towards a fourth straight loss. Treasury Wine Estates dropped 0.6 per cent.

Other markets

A mixed morning on Asian markets saw China’s Shanghai Composite down 0.1 per cent, Hong Kong’s Hang Seng ahead 0.3 per cent and Japan’s Nikkei up 1.4 per cent.

Oil continued to lose ground amid signs of disagreement within OPEC+ on extending production caps. The meeting resumes tonight. Brent crude slid 17 cents or 0.4 per cent to $US47.71 a barrel. Gold bounced $1.70 or 0.1 per cent to $US1,782.60 an ounce.

What’s hot today and what’s not

Hot today: Medicinal cannabis company Creso Pharma (ASX:CPH) jumped 13.3 per cent after a court ruling cleared the path to potential European sales. The Court of Justice of the European Union ruled that cannabidiol is not a narcotic and can therefore be sold legally in the EU. Non-executive Chair Adam Blumenthal said the decision “unlocks a number of significant opportunities for Creso Pharma in a market that the company already has an established presence.”

Not today: A surprise profit downgrade sent health and beauty products manufacturer McPherson’s (ASX:MCP) share price to a 16-month low. The group downgraded its first-half guidance and scrapped its full-year outlook, citing weak Chinese sales. First-half underlying profit before tax is now forecast to be $6.5 – $7.5 million, down from an original forecast of $10.2 – $11.1 million. The share price dived 33.2 per cent.   

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