ASX rallies off the back of stronger than expected economic news
The ASX 200 has rallied strongly following strong falls on Friday, after a spate of good economic news
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Australia stocks enjoyed a broad rebound early on Monday, following a combination of stronger than expected macroeconomic factors leading to stronger investor sentiment.
The S&P/ASX 200 index ended up 66.8 points or 0.81 per cent at 8350 points after hitting a two-day high of 8356.4 points.
The broader All Ordinaries rose by 62.50 points, or 0.73 per cent, to close at 8,613.70 points.
The Australian dollar fell slightly, down 0.1 per cent to 67 US cents.
Broadly speaking it was a strong day for investors with 10 of 11 sectors higher.
Materials and energy stocks were among the strong performers with BHP up 1.4 per cent, Rio Tinto up 1.9 per cent and Fortescue Metals up 1.53 per cent.
The rally for Australia’s three large iron ore miners came due to a resilient underlying commodity price.
AMP’s deputy chief economist Diana Mousina said markets were rallying due to renewed optimism in markets off the back of a number of foreign economic tailwinds.
“I think it is a reflection on what is going on in China and some of the measures announced in recent weeks including the decision by the Chinese banks to cut lending rates and the share buyback program that was announced last Friday,” Ms Mousina said.
She also points to strong earnings results out of the US, Middle Eastern tensions not impacting oil prices and renewed confidence of a rate cut as a driving force behind investor sentiment.
The gold miners were among the strongest performers on the ASX 200, with the likes of West Africa Resources, Genesis Minerals Limited and Bellevue Gold being three of the top five gainers on the ASX on Monday.
The shares rose 7.31, 7.21 and 5.76 per cent respectively.
“The rally in the gold price has been phenomenal over the past two years. Initially it was an inflation hedge, now it’s a hedge against rate cuts and potential geopolitical risk,” Ms Mousina said.
“Interestingly the gold miners haven’t rallied as much as the gold miners. From a business point of view there is more going on than just the gold price, but there is usually a tighter correlation between gold prices and miners.
Information technology was the only sector on the ASX to trade down, in large part due to WiseTech Global with the logistics solutions company’s CEO making headlines for personal allegations.
The three-week sell-off in WiseTech shares has continued as the board says it’s reviewing allegations against its chief executive.
“The board is currently reviewing the full range of matters raised in today’s media reports and is actively seeking further information and taking external advice,” the company told the ASX.
“The board will continue to meet regularly to consider and monitor the situation, and keep the market updated in line with its continuous disclosure obligations.
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