ASX rallies as financials, miners advance; Imugene soars while gold stocks tumble
Australian shares jumped in a broad-based rally, with heavyweight financials leading the gains as investors shrugged off recession fears amid looming rate hikes, while strong iron ore prices boosted miners.
Key points:
- ASX 200 has plummeted by 11.6 per cent since the year began
- The Dow Jones index rose 2.7pc to 31,501, the S&P 500 gained 3.1 pc to 3,912 and the Nasdaq Composite added 3.3pc to 11,608
- The pan-European STOXX 600 index rose 2.6pc
The ASX 200 was up 103 points or 1.6 per cent to 6,683 at 12:08pm AEST, extending gains to a third session.
Investors also took cues from Friday’s strong gains in global stocks, as a recent slide in commodity prices eased worries about soaring inflation and the rate-hike outlook.
The Australian dollar was down at 69.17 US cents by 12:09pm AEST.
Financials advanced as much as 1.7 per cent to their highest since mid June and were among the top gainers on the benchmark index, with the “big four” banks climbing between 1.7 per cent and 2.3 per cent.
Miners jumped 2.4 per cent as iron ore prices rose on expectation of a recovery in demand after Chinese President Xi Jinping pledged to take more effective measures to achieve the country’s economic and social development goals.
Sector leaders BHP Group, Rio Tinto and Fortescue added between 3.1 per cent and 4.1 per cent.
Technology stocks tracked Wall Street higher, rising 1.1 per cent. Block climbed 4.2 per cent, while software firm Xero added 0.7 per cent.
Limiting the benchmark index’s gains, gold stocks nosedived 6.2 per cent to their lowest since March 2020, as heavyweight Evolution Mining tumbled more than 20 per cent after cutting its production outlook.
The company now expects 2022 gold production to be around 640,000 ounces, well below its previous guidance of 700-760 thousand ounces.
Shares of Suncorp Group rose 3.4 per cent after the country’s second-largest insurer said it was conducting a strategic review of its banking operations.
Shares of Link Administration advanced 2.4 per cent even as Canadian cloud-based software company Dye & Durham lowered its takeover proposal, while digital property settlements platform PEXA group climbed 4 per cent.
Immuno-oncology company Imugene soared 41 per cent to $0.23, marketing company Metcash gained 3.5 per cent to $4.28, while gold miner Northern Star tumbled 9.6 to $7.22 and Zip dropped 5.6 per cent to $0.51.
‘Time for a bounce’
Stocks on global markets rallied on Friday and registered strong gains for the week as a recent slide in commodity prices eased worries about inflation and the rate hike outlook.
The S&P 500 climbed 3.1 per cent in its biggest daily percentage gain since May 2020, and the MSCI global index rose 4.8 per cent for the week, snapping three straight weeks of declines.
US Treasury yields edged up from two-week lows.
Investors have been worried that aggressive interest rate hikes by the Federal Reserve and other major central banks to combat inflation could cause a recession, which would reduce demand for commodities and other items.
“The [stock] market came into this week oversold, so it was time for a bounce,” said Quincy Krosby, chief equity strategist at LPL Financial in Charlotte, North Carolina.
“We’ve seen oil prices come down along with other commodity prices,” she said, adding that the market’s move was reflecting “expectations of at least a marked slowdown if not an out-and-out recession.”
Also, the University of Michigan consumer sentiment survey’s reading on five-year inflation expectations was positive for stocks, Dr Krosby said. It eased to 3.1 from the preliminary 3.3 per cent estimate in mid-June.
The benchmark S&P 500 last week confirmed a bear market.
The Dow Jones Industrial Average rose 823.32 points, or 2.68 per cent, to 31,500.68, the S&P 500 gained 116.01 points, or 3.06 per cent, to 3,911.74 and the Nasdaq Composite added 375.43 points, or 3.34 per cent, to 11,607.62.
For the week, the S&P 500 rose 6.4 per cent, the Dow added 5.4 per cent and the Nasdaq gained 7.5 per cent.
The pan-European STOXX 600 index rose 2.62 per cent and MSCI’s gauge of stocks across the globe gained 2.63 per cent.
Oil prices were higher on Friday but notched their second weekly decline.
By 12:07pm AEST, Brent crude oil was slightly up, trading at $US113.17 a barrel.
ABC/Reuters
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2022-06-27 00:37:22