Source : THE AGE NEWS
The Australian sharemarket remained up sharply at lunchtime, boosted by a rally in mining stocks, after Wall Street recorded its best session of the year as doubt swung to hope about a possible end to the war with Iran.
The ASX/S&P 200 was up 128.5 points, or 1.5 per cent, to 8619.30 at 12.24pm AEDT, with eight of its 11 sectors advancing amid growing optimism that the Middle East conflict will end soon after comments from US President Donald Trump and Iran’s President Masoud Pezeshkian overnight. The Australian dollar was stronger at US69.24¢.
“Markets have taken it on the chin for over a month and expectations may have hit a low enough point that any glimmer of hope is now much more valuable,” said Michael Bailey at FBB Capital Partners.
The local gains come after the S&P 500 leaped 2.9 per cent for its largest gain since May overnight. Just a day before, worries about the war were still nagging at the main measure of Wall Street’s health, putting it close to a 10 per cent correction from its all-time high set early this year. The Dow Jones rallied 2.5 per cent overnight, while the Nasdaq composite jumped 3.8 per cent.
Optimism entered markets on Tuesday afternoon after The Wall Street Journal reported that Trump told aides he’s willing to end the US war against Iran even if the Strait of Hormuz remains largely closed. It was further fanned overnight by a news report from the Middle East quoted Pezeshkian as saying that Iran has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”
After Wall Street closed, Trump said the US will be leaving Iran “very soon” and that it was likely Iran would no longer blockade the strait, a crucial passageway for about 20 per cent of the world’s oil, once the US concluded its operation.
Oil prices steadied after an earlier dip on the news. The price for a barrel of Brent crude, the international standard, was up 1. 3 per cent at $104.25 at lunchtime AEDT. Benchmark U.S. crude rose 1.2 per cent to $102.62,
The market is “certainly looking for a reason to rally,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers. “The question for us — how real is this?”
Local stocks bounced higher, with mining stocks surging. BHP jumped 4.6 per cent, Rio Tinto rose 4.5 per cent and Fortescue added 3.1 per cent amid hopes an end to the war will limit its damage on the global economy, and resource demand. Gold stocks roared higher, as the price of the safe haven continued to strengthen. Northern Star bounced 6.9 per cent, Evolution Mining added 7.8 per cent and Newmont gained 4.8 per cent. South 32, which owns the biggest silver mine in Australia, climbed 3.6 per cent.
The big four banks all rose as financial stocks strengthened, bolstering the ASX. Commonwealth Bank rose 0.7 per cent, Westpac added 1.1 per cent, National Australia Bank rose 0.3 per cent and ANZ Bank advanced 0.9 per cent. ‘Millionaires’ Factory’ Macquarie gained 2.5 per cent.
Energy stocks lost ground, though their losses moderated as oil prices ticked higher again. Woodside Energy lost 2.1 per cent, while Santos and Ampol each slipped 0.6 per cent. Fellow fossil fuel providers Yancoal and Whitehaven Coal were down 1.5 per cent and 1.2 per cent, respectively.
Defensive sectors such as consumer staples and utilities were also struggling as investors switched into more cyclical industries amid the renewed optimism. Coles supermarkets were down 0.4 per cent and dairy company A2 fell 2.9 per cent, while power giants Origin dropped 1.1 per cent.
Meanwhile, a possible end to the war that has crippled global aviation and forced tens of thousands of flight cancellations spells good news for airlines, taking Qantas and Virgin Australia up 3.8 per cent and 3.3 per cent, respectively, while travel agent Flight Centre jumped 4 per cent.
Tech stocks were also boosted, with software makers WiseTech, Xero and Technology One up 1.4 per cent, 2.7 per cent and 2.4 per cent, respectively, and AI data centre operator Next DC climbing 3.7 per cent as they tracked their peers on Wall Street, where bargain hunters waded back into the sector.
On Wall Street, sliding oil prices helped stocks of companies that have big fuel bills. United Airlines soared 8.1 per cent, and Norwegian Cruise Line Holding steamed 5.9 per cent higher to trim their losses for the year so far.
Tech stocks were the strongest forces lifting the market in a widespread rally where four out of every five stocks within the S&P 500 rose. Marvell Technology shot up 12.8 per cent after Nvidia invested $US2 billion ($2.9 billion) in the company and announced a partnership with it. Nvidia rose 5.6 per cent and was the single strongest force lifting the S&P 500.
Centessa Pharmaceuticals soared 44 per cent after Eli Lilly said it was buying the company working on treatments for excessive daytime sleepiness and other neurological conditions. Lilly, which is paying up to $US7.8 billion if certain conditions are met, rose 3.7 per cent
Bond yields remained lower following a couple of reports on Tuesday on the US economy that came in better than economists expected. One said confidence among US consumers unexpectedly improved. The other said US employers were advertising more job openings at the end of February than expected, though fewer than the month before.
Elsewhere, artificial intelligence giant OpenAI has completed a deal to raise $US122 billion from investors at an $US852 billion valuation, marking the company’s largest funding round to date and bolstering its costly push for more chips, data centres and talent.
with AP, Bloomberg
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