The share market sealed its best two-day advance in six weeks as unemployment hit a 14-year low and Wall Street welcomed clarity on this year’s rates outlook.
The S&P/ASX 200 climbed 72 points or 1 percent to its highest close since February 17. The advance extended its two-day gain to 153 points or almost 2.2 percent.
Tech and speculative stocks led for a second day with heavyweight support from the materials and financial sectors. Energy stocks and defensive sectors trailled.
What moved the market
Market sentiment began to improve earlier this week with signs of progress in Ukraine-Russia peace talks. A regional rebound gained momentum yesterday when China indicated it was preparing to stimulate its economy to encourage growth.
The rally really caught flight overnight after the Federal Reserve asserted the US economy was strong enough to withstand a rate increase at every meeting this year. The Fed raised its benchmark by 25 basis points and indicated it was willing to do so six more times before year-end. Wall Street was initially staggered by the news, then decided it was a vote of confidence in the economy.
“The probability of a recession within the next year is not particularly elevated,” Chair Jerome Powell said. “All signs are that this is a strong economy,” he added.
The S&P 500 roared up 2.24 percent to its biggest gain since April 2020. The Nasdaq Composite gained 3.77 percent and the Dow 1.55 percent.
The Australian dollar had its best day in more than a year. The Aussie jumped 1.4 percent against a falling greenback to 73.18 US cents.
“Typically, you’d expect all currencies to fall against the dollar when a central bank confirms it is so hawkish,” City Index senior market analyst Matt Simpson said.
“Yet when the Fed is concerned, for it to be so confident that the US economy is strong is effectively a boost to global confidence and trade. It also increases the odds that other banks will follow suit to raise rates, which is why we saw commodities and commodity currencies rise in tandem overnight.”
Stocks held their gains after mid-morning data showed the unemployment rate fell to 4 percent last month from 4.2 percent in January. The economy added 77,400 jobs, almost twice as many as economists expected. The jobless rate was the lowest since August 2008.
Winners’ circle
Nine of eleven sectors advanced, led by the risk-sensitive tech sector. Some of this year’s worst performers were among today’s best.
PointsBet surged 10.32 percent, Zip Co 10.14 percent and Polynovo 8.33 percent. Afterpay parent Block put on 10.2 percent, Novonix 7.46 percent and EML Payments 7.23 percent.
Clinuvel Pharmaceuticalsclimbed 1.94 percent after engaging a partner to manufacture its adrenocorticotropic hormone drug.
Fortescue Metals bounced 4.43 percent after hopes of Chinese stimulus lifted spot iron ore prices more than 7 percent yesterday. Rio Tinto firmed 1.57 per cent. BHP added 1.11 percent.
Shareholders welcomed James Hardie‘s plan to expand its Australian presence. The share price rose 2.89 percent on news the fiber cement manufacturer bought a greenfield site in Melbourne to supplement manufacturing sites in NSW and Queensland.
Wesfarmers was set to become the new owner of the Priceline pharmacy chain after Australian Pharmaceutical Industries revealed more than 95 percent of proxy votes had been cast in favour of a takeover. Wesfarmers edged up 0.32 percent as API shareholders voted this afternoon.
Ampol firmed 3.56 percent after New Zealand’s competition regulator cleared its acquisition of Z Energy, subject to Ampol completing the divestment of its Gull business. Z Energy shareholders will vote on the proposal on March 25.
McMillan Shakespeare gained 3.75 percent on news Rob De Luca will join as CEO and Managing Director. De Luca will replace Mike Salisbury, who will stand down in May.
Poseidon Nickel flew up 9.2 percent on news joint-venture partner Pure Battery Technologies will receive $119.6 million from the federal government to develop a battery material refinery hub in Kalgoorlie. Poseidon intends to supply nickel concentrate to the hub.
Breast cancer detection specialist Imagion Biosystems surged 46.51 percent on promising early results from the first in-human study of its MagSense imaging agent.
4D Medical gained 19.86 percent after launching the world’s first dedicated lung scanner.
Doghouse
GrainCorp fell 2.76 percent after wheat slumped 6 percent in European trade in the wake of an Indian plan to fill gaps left by the loss of Russian and Ukrainian supply.
India announced it will give wheat exports priority and make extra rail wagons available. Australian exporters had benefitted from huge increases in grain prices since the Russian invasion.
Supermarkets and other traditional defensive stocks declined as traders rotated into sectors with a stronger risk profile. Woolworths slipped 0.74 percent, InvoCare 2.06 percent, Metcash 1.34 percent and Coles 1.28 percent.
Woodside Petroleumslid with crude, falling 1.32 percent. Santos gained 0.95 percent.
Elsewhere in the resources space, Whitehaven Coal dropped 1.27 percent, Gold Road Resources 3.28 percent and South32 0.42 percent.
Other markets
Asian markets delivered a second day of strong gains. The Asia Dow jumped 3.41 percent, China’s Shanghai Composite 2.59 percent, Hong Kong’s Hang Seng 5.79 percent and Japan’s Nikkei 3.36 percent.
US futures were subdued in the wake of last night’s market surge. S&P 500 futures eased three points or 0.06 percent this afternoon.
Gold reversed off a two-week low. The yellow metal bounced US$28.70 or 1.5 percent to US$1,937.90 an ounce.
Oil also rebounded. Brent crude rose US$1.66 or 1.7 percent to US$99.68 a barrel.
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