Mining and banking giants lifted the Australian sharemarket to within 50 points of its all-time high on Tuesday as strong commodity prices and a positive assessment from the Reserve Bank buoyed traders’ spirits.
Gains for 11 of the market’s 13 biggest companies helped the benchmark ASX 200 surge out of the four-day Easter break to fresh four month highs and record its seventh best finish in history.
The index shrugged off a weak Wall Street lead and concerns around economic growth in China and Europe to rise 41.8 points or 0.6 per cent and close at 7565.2, a level last seen during the early January holiday rally.
At one point the local bourse got as high as 7584.9 to be just 47.9 points off the record intraday high of 7632.8 set on August 13 last year.
The broader All Ordinaries also rose 0.6 per cent, or 45.7 points, to close at 7867.9 while the Australian dollar edged up to 73.80 US cents at the local close.
Surging commodity prices boosted the likes of BHP, Rio Tinto, Fortescue Metals and Woodside Petroleum, while the Big Four banks were cheered by minutes from the April 5 meeting of the RBA board, which suggested an earlier interest rate hike and strong financial conditions ahead.
These factors overshadowed a litany of lingering fears, including but not limited to the darkening outlook for global growth in the wake of the Ukraine conflict and China’s Covid-19 lockdowns.
IG Markets analyst Hebe Chen noted the World Bank had cut its 2022 outlook predicting that global economic growtxjmtzywh will slow to 3.2 per cent from 4.1 per cent, reasoning to the adverse impact from Europe and Central Asia.
“Actually, not just Ukraine and China are facing a threat to their economic growth,” Chen said.
“In the western world, people (have) seemingly come to terms with the fact that the central banks have to deploy any available tools at scale to squeeze inflation out of the economy.”
The latest insight into the Reserve Bank of Australia’s thinking did indeed reveal an accelerated rate cycle was likely, but probably not until after the May 21 federal election.
The banks bounced on the RBA’s assessment, and its promising view of the local economy.
Commonwealth Bank added 0.5 per cent to $107.01, National Australia Bank was up 1.2 per cent to $33.25, Westpac gained 1.2 per cent to $24.40 and ANZ rose 1.2 per cent to $27.75.
Macquarie Group also rose, adding 0.9 per cent to end the day at $205.55.
Iron ore faded into the close, but prices were still strong enough amid supply chain disruptions to give BHP a 1.3 per cent lift to $53.17.
Rio Tinto climbed 0.9 per cent to $121.66, Fortescue Metals was up 0.6 per cent to $21.73 and BlueScope Steel jumped 2.7 per cent to $22 after buying back another tranche of shares.
Oil prices rose after Libya closed its biggest oil field due to protests and warned of further outage, with Brent crude rising to $US113 a barrel and US natural gas prices touching 13-year highs.
This helped Woodside Petroleum rise 1.6 per cent to $32.91, with Santos up 1.6 per cent to $8.32 and Origin Energy 0.6 per cent higher at $6.59.
The only major weakness at the pointy end of Tuesday’s market came from healthcare stocks CSL and ResMed, which slumped 1 per cent to $262.35 and 0.1 per cent to $31.59 respectively.
