ASX climbed higher on improving commodity prices, with Fortescue outperforming among the top 200 stocks.
The Australian stock market surged higher, iron ore inventories soared after soaring prices for steel raw materials, as well as base metals and petroleum.
The benchmark S & P / ASX200 rose 0.78% to 7,410.6, while the All Ordinaries index gained 0.69% to 7,741.7.
CommSec analyst Tom Piotrowski said the result was particularly encouraging after a generally weaker session in northern hemisphere markets overnight and a mixed lead from Wall Street, where tech stocks were outdone with enthusiasm.
“What is emerging… is a recovery for sectors that have been quite besieged in recent days,” he said.
OMG chief executive Ivan Churilov said the market had performed well despite the drop in ASX futures at the end of the session.
“A rally in iron ore prices has had resources that drive our 200 index,” he said.
Rio Tinto jumped 3.6% to $ 95.13, the more diversified BHP jumped 4% to $ 38.05 and Fortescue was the best performer of the S & P / ASX200, climbing 9.8% to 17, $ 35.
“Fortescue Metals continues to recover,” Churilov said.
“Despite the (recently) depressed stock price, or perhaps because of it, Fortescue is still proving to be the market’s favorite iron ore game.
“While the rise in iron ore prices gives investors hope, the decline in the August reporting season was exaggerated, so the ore is being bought aggressively even at the slightest positive news.
“The small-cap iron ore miners also had a good run today: Mineral resources were up 4.93% to $ 44.10 and Champion Iron 8.04% to $ 4.57. “
Energy stocks rose after Woodside announced it would acquire the oil arm of BHP in a $ 40 billion mega-merger and gave the green light to the massive gas project from Scarborough off Western Australia.
Woodside rose 3.46% to $ 22.45, Beach Energy rose 4.6% to $ 1.25, Origin rose 2.82% to $ 5.11, Santos gained 2.12% to $ 6.74 and Oil Search rose 1.45% to $ 4.20.
“This contrasts with what was a pretty convincing downtrend over the past week when oil prices fell about 6 percent,” Piotrowski said.
“So today energy stocks are the most improved group. “
The Big Four banks all rose, with ANZ rising 1.9% to $ 27.27, the Commonwealth Bank finding 1.07% to $ 96.82, the National Australia Bank adding 0.85% to $ 28.47 and Westpac Firming 0.6% at $ 21.81.
They too had been at the forefront of market weakness in recent sessions, Piotrowski said.
“We are seeing pretty sharp recoveries,” he said.
Mr Churilov said the hikes outweighed weakening gold prices, which slipped against the strengthening US dollar and confirmed hawkish Jerome Powell will continue to lead the US Federal Reserve.
Among gold producers, Silver Lake fell 5.6% to $ 1.68, Ramelius fell 4.78% to $ 1.69, Evolution Mining fell 3.99% to 4.09 $, Gold Road lost 3.44% to $ 1.54, St Barbara lost 3.33% to $ 1.45 and Chalice softened 1.5 percent to $ 9.76.
“Powell’s appointment has also hurt the tech space, which is being sold amid rising bond yields,” Churilov said.
“Afterpay led the industry down, while some weaker than expected results for Technology One also weighed on performance.”
Afterpay fell 5.37% to $ 107.45, while Technology One fell 2.86% to $ 12.55 despite a 15% increase in full-year net income.
NEXTDC lost 5.2% to $ 11.82, Wisetech slipped 5.63% to $ 53, Xero fell 3.46% to $ 141.32 and Altium erased 2.57% to 41.63 $
Moro auto parts and accessories seller Bapcor fell into the red, plunging 9.58% to $ 7.46 after chief executive Darryl Abotomey announced his retirement.
“After a ten-year term, the shareholders will have gotten used to him as a skipper,” Chourilov said.
“The anxiety about who will take the helm was enough for some investors to get started.
“The current price level creates an opportunity for investors. With the end or end of blockages and the resumption of interstate travel, analysts expect a significant increase in road accidents.
“Aftermarket vehicle maintenance – like accidental repairs and parts replacements – can expect heavy use over the next few months. “
In business news, Marion Kohler, head of the domestic markets department at the Reserve Bank of Australia, delivered a speech noting that asset prices rise when interest rates are low, raising the prospect of a “return-seeking” behavior, where investors raise the price of risky assets to the extent that the risk may no longer be correctly assessed.
“This, in turn, increases the risk of a big correction on the road,” she warned.
“It is therefore important to closely monitor risk premia to judge whether asset prices appear to be judiciously valued. “
The Australian dollar was buying 72.2 US cents, 53.89 UK pence and 64.22 euro cents in afternoon trading.