Australia’s mining titans fuelled an impressive mid-session turnaround for local stocks, shaking off trade tensions and US civil unrest to drive the ASX to a strong close on Monday.
The benchmark ASX 200 closed 63.5 points, or 1.1 per cent, higher at 5819.2, in no small part because of surging iron ore prices.
The Aussie dollar also gained 1.3 per cent against the US greenback to a four-month high of US67.53c.
The materials sector was easily the star of the day. It rose by a collective 3.1 per cent after iron ore broke through the psychological $US100 per tonne barrier. Spot gold was also 0.9 per cent higher at near eight-year highs of $US1742.33.
Materials added 35.2 points to the index and just one firm in the sector finished lower, Incitec Pivot. BHP finished up 3.1 per cent to a more than three-month high of $35.71 and Rio Tinto rose 4.1 per cent to $97.23.
Fortescue Metals jumped 6.40 per cent to set a new record high $14.80. Gold miner Newcrest also joined the party with a 2.75 per cent rise to $31.42.
“Iron ore prices are making things easier, but the Australian market has made it clear it wants to keep rallying,” RBC Capital Markets head of equities Karen Jorritsma said.
Healthcare added 14 points to the ASX, with CSL up 3.06 per cent to $284.67. Investors stepped lightly into the new week as lingering trade tensions and US civil unrest made for a subdued start. Futures were pointing to a slightly positive session on Wall Street tonight.
The ASX fell by as much as 0.85 per cent when it opened following a weekend of riots and protests in the US, including outside the White House, in the wake of the death of George Floyd in police custody last week.
Nerves were also jangling after US President Donald Trump’s address on China over the weekend. But that missive did not turn out as inflammatory as the market had predicted.
Tensions between Washington and Beijing remain elevated - especially after President Trump reiterated Hong Kong’s special trading status with the US was under threat - but he did not withdraw from the phase one US-China trade agreement signed in January.
Trump also declined to impose sanctions on Chinese officials. Asian stocks surged in response, helped along by positive Chinese manufacturing data.
TMS Capital portfolio manager Ben Clark said it was clear there was still money trying to get into the market.
“The dips are still being very aggressively bought,” Mr Clark said. “In my opinion, a lot of fund managers have been caught with very large cash balances, haven't believed in this rally and written it off ... only for it to keep going.”
The week's flow of data begins in earnest on Tuesday with the balance of payments, international investment position, and business indicators for the March quarter.
Analysts will also be looking for colour from the Reserve Bank board meeting on Tuesday but the cash rate is not expected to shift from its current record low 0.25 per cent.