Ukraine peace talk fuels hope, bolstering broad-rally: ASX closes up 1.1%

Market Reports

by Melissa Darmawan

In a global rally, Aussie shares jumped on the wagon and surged for its second straight day, it’s best close in five days as hopes of another peace talk to end the Ukraine invasion buoyed by talks of alternative options to Russian oil boosted the local market higher.

In solidarity, adding to the financial sanctions on Russia from the West, companies around the globe have unveiled their plans to suspend doing business with Russia, including McDonald’s, Coca-Cola and Disney.

Today, Rio Tinto (ASX:RIO) joined the club as well as Worley Parsons (ASX:WOR) with the famous Chicken Kiev meal at the supermarket giant Woolworths (ASX:WOW) set to go through a name change from the Russian spelling of Kiev to be called Chicken ‘Kyiv’ as reported by The Australian.

In further support, The House approved US$13.6 billion in emergency spending for America’s response to the war with lawmakers this afternoon. Both parties expect that more spending is needed for humanitarian relief and military aid for the largest conflict in Europe since World War II, according to Bloomberg.

The positive risk sentiment saw a broad-based rally led by information tech, surging for a second day, up 3.3 per cent for the day, up 6.5 per cent for the two, but down around 9 per cent year to date. Consumer discretionary was second best as travel stocks took-off on hopes of an arrest in the rising cost of jet fuel, followed by financials amid the Aussie treasury yield lifting higher as prices fall inversely.

Investors now look ahead to an eventful next 24 hours with the first central bank to meet since the war started. The European Central Bank is set to speak and unveil its interest rate decision while we have the US consumer price index figures also due.

Market participants are expecting to see a very concerned President, talking about the impact of the Russian invasion in Ukraine, the impact on the economy and what it means for inflation which is expected to rise further with inflation at 5.8 per cent, almost three times the ECB’s target.

Given the situation, it will be very interesting to see how President Lagarde will set expectations with economic actors to deliver price stability and suppress inflation while being a helping hand.

Amid weakness in the Euro, a reflection of outflow on fears about Russian contagion, traders are concerned about the impact on European banks, how it will spill over to companies and their margins and also Russian exports, and commodities which are essentially an illiquid asset.

Meanwhile, economists expect US consumer price index to rise to 7.9 per cent in February from 7.5 per cent the month before.

At the closing bell, the S&P/ASX 200 was 1.1 per cent or 78 points higher at 7,131.

Futures

The Dow Jones futures are pointing to a fall of 70 points.
The S&P 500 futures are pointing to a fall of 10 points.
The Nasdaq futures are pointing to a fall of 59 points.
The SPI futures are pointing to a rise of 88 points when the market next opens.

Best and worst performers

The best-performing sector was information tech, up 3.3 per cent followed by consumer discretionary, financials, industrials, and property, up in the order of 2.5 to 2.9 per cent. The worst-performing sector was energy, down 2.5 per cent, followed by materials, down 1.8 per cent while utilities shed 0.1 per cent.

The best-performing stock in the S&P/ASX 200 was Paladin Energy (ASX:PDN), closing 11 per cent higher at $0.85. It was followed by shares in Block (ASX:SQ2) and Life360 (ASX:360).

The worst-performing stock in the S&P/ASX 200 was Nickel Mines (ASX:NIC), closing 13.2 per cent lower at $1.22. It was followed by shares in Rio Tinto (ASX:RIO) and Beach Energy (ASX:BPT).

Asian markets

Japan's Nikkei has gained 3.9 per cent.
Hong Kong's Hang Seng has gained 0.6 per cent.
China's Shanghai Composite has gained 1.5 per cent.

Commodities and the dollar

Gold is trading at US$1980.03 an ounce.
Iron ore is 2.9 per cent lower at US$157.55 a ton.
Iron ore futures are pointing to a fall of 1.7 per cent.
Light crude is trading $1.83 higher at US$88.00 a barrel.
One Australian dollar is buying 73.11 US cents.

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