The Australian sharemarket had its best session in nearly two weeks as investors welcomed the Reserve Bank’s reticence to back a sooner-than-expected rate hike, even though the board is confident the Omicron variant won’t derail the economy.
The ASX 200 shook a weak US lead on Tuesday and gained momentum throughout the session as traders easily clawed back Monday’s losses.
The local benchmark finished 62.8 points (0.86 per cent) higher at 7355.0, just its fourth gain in the past 10 trading days.
The broader All Ordinaries added 64.5 points, or 0.85 per cent, to finish at 7666.7, while the Aussie dollar was stable at 71 US cents.
Tuesday’s turnaround was powered by strength among the iron ore giants BHP, Rio Tinto and Fortescue Metals – no doubt buoyed by the prospect of increased Chinese stimulus, while healthcare firms CSL, Sonic, and Fisher and Paykel also provided something of a Covid hedge.
The energy sector also bounced back as dip buyers swooped, while the major banks finished ahead.
Afterpay was a drag on the local tech sector, finishing 1.1 per cent lower at $83 and at one point dropping to its lowest since October 2020. Rival Zip outperformed with a 5.1 per cent gain to $4.34.
Wall Street had sold off heavily amid uncertainty surrounding global monetary policy and the possible impacts of Omicron, with US markets chasing the Asian sector lower for a change.
But instead of wilting at the dawn of a new session, the ASX rose in what OANDA Asia-Pacific analyst Jeffrey Halley credited to the pull of the buy-the-dip sentiment and short-covering in US futures.
IG market analyst Kyle Rodda said the release of the minutes from the RBA’s December meeting also proved a positive influence.
Mr Rodda said the minutes showed a central bank still of the belief the economy is some way away from requiring rate hikes – especially not the four baked into futures markets.
Furthermore, the board is adamant the contagious new Omicron strain “will not derail the recovery” of the economy.
Mr Rodda did however stress that one strong session did not make a Santa rally.
“The movements we’re seeing are indicative of a market that is a bit volatile to start with … but also characteristic of holiday trading conditions that happen to be quite choppy,” he said.
CSL jumped 4.9 per cent to $287.21 after it opened its share purchase plan to raise another $US750m for its Vifor Pharma acquisition, while Sonic Healthcare leapt 2.4 per cent to $45.47 and touched an highest of $45.58 as Covid testing numbers continue to surge.
BHP rose 1.5 per cent to $41.71, Rio Tinto climbed 3.2 per cent to $101.40, and Fortescue Metals added 1.7 per cent to $19.79 on an iron ore price recovery and China demand hopes.
Lithium player Pilbara Minerals tanked, dropping 9.1 per dent to $2.51 on downgraded December quarter annual concentrate production and shipping guidance.
Energy firms Woodside, Santos, Beach, and Origin all finished ahead, as did coalminers Whitehaven and New Hope.
Meanwhile, beleaguered fund manager Magellan endured a choppy session, ultimately adding 4.4 per cent to $20.56 after Monday’s $1.8bn nosedive.