Australian sharemarket rebounds, RBA bond move and rate talk boost banks

The ASX wiped out Thursday’s losses and ended the week 3.5 per cent higher after an RBA move and commentary boosted bank stocks.

The Australian sharemarket rebounded strongly after record highs on key Wall Street indices, while announcements and commentary by the Reserve Bank boosted bank stocks.

The S&P/ASX200 closed 1.11 per cent firmer at 6840.5 while the All Ordinaries Index rose 1.07 per cent to 7112.9.

CommSec said the performance recouped all of Thursday’s losses and lifted the market by 3.5 per cent this week, with slight falls in materials and utilities sectors easily made up by gains in all others.

OpenMarkets Group chief executive Ivan Tchourilov said the benchmark ASX200 index had its best week since October.

“After the Gamestop drama of last week in the US, things there and down here are on the up,” Mr Tchourilov said.

RBA news helped Australia's big four banks. Picture: AAP

“The rally’s been led by banking and tech stocks, and fuelled by the RBA announcing they’d be increasing bond purchases by $100bn, coupled with commentary around rates staying on hold until at least 2024.

“The banks are back in vogue with COVID-related risks subsiding, and higher dividend payouts now well and truly back on the table driving positive sentiment, especially now rates are locked in to be ‘lower for longer’.

“There’s a lot of additional liquidity coming into the system, and the banks will be beneficiaries of this.”

ANZ was up 2.06 per cent at $25.29, Commonwealth Bank added 1.82 per cent to $88.64, National Australia Bank lifted 2.15 per cent to $25.23 and Westpac appreciated 2.03 per cent to $22.15.

News Corp, owner of this title, leapt 13.19 per cent to $28.41 after announcing its second quarter was the most profitable for more than seven years, reflecting the ongoing digital transformation of the business.

“It’s certainly beating expectations … for its company performance,” CommSec analyst James Tao said.

News Corp shares soared on the back of the media group’s second quarter results. Picture: John Fotiadis

Real estate website company REA Group, which is majority owned by News Corp and owns brands including realestate.com.au, advanced 1.62 per cent to $157 after reporting a first half profit surge.

Chief executive Owen Wilson described the result as remarkable, particularly given the Melbourne market came to a virtual standstill during the lockdown.

“It’s certainly been helped by low interest rates boosting … interest in housing,” Mr Tao said.

Buy now pay later provider Zip Co jumped 7.96 per cent to $8.68 while larger rival Afterpay put on 3.41 per cent to $151.30.

It came after payments giant PayPal released its fourth quarter results in the US overnight, remarking that the growth in its BNPL service was the biggest positive surprise during the period.

“The strong launch of PayPal’s service is another data point which suggests BNPL demand in the US is very strong,” Goldman Sachs said in reflecting on what the results meant for Afterpay.

The NSW Independent Planning Commission’s recommendation against South32’s Dendrobium underground mine extension has big implications for BlueScope’s Port Kembla steelworks. Picture: Brook Mitchell/Getty Images

Despite iron ore prices improving overnight, Rio Tinto eased 0.83 per cent to $113.33 and BHP retreated 0.25 per cent to $43.80 but Fortescue gained 0.69 per cent to $23.23.

BHP spin-off South32 backtracked 2.93 per cent to $2.65 after the NSW Independent Planning Commission handed down a report recommending against approval of its Dendrobium Next Domain coal project.

The commission found the proposed major mine design risked long-term and irreversible damage to Greater Sydney and the Illawarra region’s drinking water catchment, saying the company had not appropriately addressed concerns over the planned design.

Shares in BlueScope, which wanted the coal for its Port Kembla Steelworks, dropped 1.7 per cent to $16.77.

The Aussie dollar was buying 76.03 US cents, 55.55 British pence and 63.53 Euro cents in afternoon trade.