Oil sizzles ASX's 5-day rally, closing 0.5% higher

Market Reports

by Melissa Darmawan

Aussie stocks rose for its fifth straight day fueled by a commodity boom as eastern Europe tensions continued to trigger worries. Fears of a tight commodity supply amid economic sanctions to Russia from the West remained front of mind of investors after a strong rebound on Wall St.

Supercharging the rally was the reassurance from Fed Chair Jerome Powell advocating a 25 basis rate hike this month and the Fed’s focus to combat hot inflation, an outcome less aggressive than investors thought. The bond market saw volatility as bond traders digest how this is going to unfold amid the Aussie dollar eyeing a 73 handle, buying 73.05 US cents.

Energy, materials, and utilities all rallied in lockstep for a second day, with consumer discretionary and industrials eking out a gain offsetting the losses led by consumer staples, healthcare and information technology.

The dramatic rally in oil prices saw its highest close in 9 years with almost a 9 per cent rise to US$114.34. Meanwhile, thermal coal soared 33 per cent while aluminium, copper, nickel, zinc and iron ore notched gains in the order of 3 to 6 per cent on the London Metals Exchange.

Energy giants Woodside Petroleum (ASX:WPL) surged 3 per cent at $31.34, Beach Energy (ASX:BPT) soared 4.7 per cent at $1.68, while Santos (ASX:STO) closed 1.7 per cent higher at $7.84.

Mining and base metal players Fortescue Metals Group (ASX:FMG) jumped 4.2 per cent at $19.37, Rio Tinto (ASX:RIO) added 3.7 per cent at $127.85, while BHP Group (ASX:BHP) closed 3.6 per cent higher at $50.06. Meanwhile, OZ Minerals (ASX:OZL) rose 5 per cent to $27.09 and South32 (ASX:S32) spiked 1.7 per cent to $27.09.

As risk was put back on the table, gold mining stocks slid with the likes of Northern Star (ASX:NST) down 1.8 per cent at $9.95, and Newcrest Mining (ASX:NCM) closed 1.1 per cent lower at $25.32.

PointsBet (ASX:PBH) was back in the winner’s corner, soaring 18.2 per cent amid speculation that there is a merger on the horizon with a US giant. There was also a broker note which provided a positive lens on the US-focused gaming operator on valuation attraction after deep losses of late.

Elsewhere, the number of companies trading ex-dividend continues with the likes of ASX (ASX:ASX) tumbling 3.1 per cent, Nine Entertainment Co (ASX:NEC) fell 2.2 per cent, Invocare (ASX:IVC) closed 4.4 per cent lower.

China’s consumer and retail shares were on the move amid Beijing considering an exit from its strict Covid-Zero policy.

Investors now look to the European market and Wall St as the Russia attack moves into its second week. A raft of PMI data and weekly jobless claims is due ahead of the big US jobs report on Friday.

At the closing bell, the S&P/ASX 200 was 0.5 per cent or 35 points higher at 7,151.

Local economic news

Australia's trade surplus increased to $12.9 billion in January from a downward revised $8.8 billion in the previous month, coming in better than economists expected. It was the largest trade surplus since last July as exports rose, while imports fell amid further growing global demand. Exports grew 8 per cent to an all-time high of $49.3 billion, while imports fell 2 per cent to a new record high of $36.4 billion over the month as per the Australian Bureau of Statistics.

Meanwhile the Bureau also unveiled a tumble of 28 per cent in January for the nation’s building approvals when compared to the month before, coming in much worse than the 3 per cent fall economists were expecting.

The Australia AiG Construction purchasing managers index (PMI) rose by 7.5 points to 53.4 in February, erasing the contraction from December 2021 to January this year. The latest results show that the sector is expanding with a score above 50 points.

Futures

The Dow Jones futures are pointing to a rise of 6 points.
The S&P 500 futures are pointing to a rise of 1 points.
The Nasdaq futures are pointing to a fall of 19 points.
The SPI futures are pointing to a rise of 37 points when the market next opens.

Best and worst performers

The best-performing sector was materials, up 2.6 per cent. The worst-performing sector was consumer staples, down 2.3 per cent.

The best-performing stock in the S&P/ASX 200 was PointsBet Holdings (ASX:PBH), closing 18.2 per cent higher at $4.35. It was followed by shares in Whitehaven Coal (ASX:WHC) and Liontown Resources (ASX:LTR).

The worst-performing stock in the S&P/ASX 200 was PolyNovo (ASX:PNV), closing 6.4 per cent lower at $1.10. It was followed by shares in Platinum Asset Management (ASX:PTM) and InvoCare (ASX:IVC).

Asian markets

Japan's Nikkei has gained 0.7 per cent.
Hong Kong's Hang Seng has gained 0.5 per cent.
China's Shanghai Composite has gained 0.1 per cent.

Commodities and the dollar

Gold is trading at US$1923.23 an ounce.
Iron ore is 0.4 per cent higher at US$145.00 a ton.
Iron ore futures are pointing to a rise of 9.1 per cent.
Light crude is trading $3.74 higher at US$114.34 a barrel.
One Australian dollar is buying 73.05 US cents.

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