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The share market briefly surged more than two per cent to its highest in over a fortnight following Wall Street’s best week since June.

The S&P/ASX 200 was ahead 115 points or 1.71 per cent to 6791 at mid-session. Earlier, the index touched 6823, a gain of 2.2 per cent.

Miners, property trusts and tech stocks led the advance. Almost 19 of every 20 of the index’s component companies rallied.

What’s driving the market

Australian stocks played catch-up after Wall Street’s best week in four months. The ASX 200 rose to within five points of this month’s peak before paring its advance.

US stocks surged following reports the Federal Reserve will at its next meeting discuss slowing its aggressive pace of interest rate increases. Bond yields declined and the US dollar plunged, easing two of the headwinds driving this year’s bear market in US equities.

The S&P 500 rallied 2.37 per cent as the odds on another 75 basis point increase to the target federal funds rate in December dropped from 75 per cent to below 50 per cent.

The Dow and Nasdaq each gained more than 2.3 per cent. For the week, the S&P 500 put on 4.74 per cent, the Dow 4.89 per cent and the Nasdaq 5.22 per cent.

“The equities market is trying to form a bottom to get to the last leg of the bear market,” David Donabedian, chief investment officer at CIBC Private Wealth US, wrote. “It feels like a two-way market right now. We have a tug of war going on between the skeptics and those who think it is time to own equities.”

Back home, private-sector activity contracted this month for the first time since January, according to S&P Global’s monthly survey. The S&P Global Flash Australia Composite Output Index dropped to 49.6 from 50.9 in September. Readings below 50 indicate shrinking activity.

The services PMI fell to a nine-month low of 49 from 50.6 in September. The manufacturing PMI dropped to a 14-month low of 52.8 from 53.5.

“Private sector output fell in October amid lower demand for Australian goods and services. Anecdotal evidence suggested a deterioration in economic conditions at the start of Q4 contributed to lower new business,” the report said.   

Reserve Bank assistant governor Christopher Kent reiterated the bank’s commitment to raising interest rates. The size of the hikes will depend on the shifting outlooks for inflation and jobs.  

“The Board expects to increase interest rates further in the period ahead, given the need to establish a more sustainable balance of demand and supply and in the face of a very tight labour market,” Kent told the Commonwealth Bank Global Markets Conference.

“The size and timing of rate increases in Australia will depend on incoming data – including the response of household spending to the tightening in financial conditions that is still working its way through the system. Rate increases will also depend on the outlook for inflation and the labour market,” he added.

Going up

The heavily-weighted materials sector jumped 3.5 per cent on bets interest rates may not go as high as previously anticipated, reducing the risk of a global recession. Bulk metal majors BHP, Rio Tinto and Fortescue Metals gained between 2.3 and 3.7 per cent.

Champion Iron firmed 7.45 per cent. Battery metals developer Novonix soared 16.29 per cent.

South32 rallied 1.08 per cent as increased copper and aluminium production helped soften news of a metallurgical coal downgrade. The miner revised its full-year Illawarra coal guidance down 5 per cent. Copper production increased 11 per cent last quarter. Aluminium was up 9 per cent.

“We maintain a strong outlook with 13 per cent production growth expected in FY23,” CEO Graham Kerr said.

Gold miners soared after the yellow metal bounced off a two-and-a-half year low. Evolution Mining climbed 9.67 per cent, Gold Road Resources 7.03 per cent and Sandfire 6.59 per cent.

Newcrest trimmed its rise after operations at its Canadian mine were suspended following an incident. The gold miner said a contractor was involved in a “critical incident” at the Brucejack mine in British Columbia.

All mining and processing operations were suspended until further notice. The share price cut a 5 per cent+ advance to 3.57 per cent.

Gaming software maker BetMakers climbed 3.73 per cent after expanding its footprint in horse racing. The firm will acquire ABettorEdge, a race analysis tool that trades as Punting Form, for $3 million up-front and a potential extra $17 million in earn-out.  

Diagnostics imaging firm Integral Diagnostics inched up 0.39 per cent after scrapping plans to acquire Exact Radiology. No reason was provided for abandoning a $37.5 million deal announced back in May.  

Going down

A gold production downgrade helped knock OZ Minerals down 1.14 per cent. The miner said it now expects to produce 203,000-220,000 ounces of gold this fiscal year, down from previous guidance of 208,000-230,000. Full-year copper guidance was unchanged, but costs were expected to increase.

New Hope fell 4.92 per cent as its shares traded without the right to the next dividend. The coal miner hit an all-time high on Friday.

GrainCorp eased 1.26 per cent. Ramsay Health Care dipped 1.03 per cent. Downer EDI shed 0.46 per cent.

Other markets

Chinese mainland and Hong Kong stocks fell after President Xi Jinping tightened his grip on government. Hong Kong’s Hang Seng skidded 1.95 per cent. The Shanghai Composite dipped 0.14 per cent. The Asia Dow rallied 1.05 per cent. Japan’s Nikkei put on 1.05 per cent.

US futures trimmed strong early gains. S&P 500 futures were recently ahead 15 points or 0.4 per cent.

Oil regained US$94. Brent crude for December delivery rallied 52 US cents or 0.56 per cent to US$94.02 a barrel.

Gold extended a rebound from Friday’s two-and-a-half-year low. The yellow metal rose US$3.40 or 0.2 per cent to US$1,659.70 an ounce.

The dollar eased 0.07 per cent to 63.65 US cents after surging 2.4 per cent on Friday.

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