Stocks’ best day since RBA cut

The local market has added $27bn in value as offshore nerves were soothed.

The Australian sharemarket closed the opening session of the week with its best advance since the Reserve Bank cut interest rates on May 3 as Brexit-related nerves were temporarily calmed.

The gains, which amounted $27 billion in value, were led by the resources sector amid broker upgrades for the major energy players and a rise in commodity prices.

At the closing bell, the benchmark S&P/ASX 200 index rose 94.1 points, or 1.82 per cent, to 5256.8, while the broader All Ordinaries index jumped 87.3 points, or 1.66 per cent, to 5335.6.

The action came after a number of polls over the weekend revealed a shift toward the ‘Remain’ camp ahead of a Brexit referendum that will take place on Thursday night (AEST).

Analysts are tipping a sharp relief rally should Britain stay in the EU, but volatility is widely expected in the lead-up.

“The odds of the UK leaving the EU have fallen below 30 per cent again, but there are at least five more polls to go and given the 130 per cent increase in GBP/USD 1-week implied options volatility on Friday, this is still a market that is fragile and happy to turn on a dime,” IG chief market strategist Chris Weston said.

“For now though risk appetite has increased.”

Through the local session the British pound rallied 1.5 per cent against the safe haven Japanese yen, a sign of the sharp uplift in sentiment.

That sentiment boost was best seen in the energy sector, which shone in the aftermath of a 4 per cent surge in crude prices on Friday night.

The sector was further aided by a wide-ranging ratings upgrade from Morgan Stanley, with Woodside, Origin and Santos all on the receiving end of positive forecast adjustments.

Santos soared 9.6 per cent to $4.70, Origin rocketed 9.4 per cent to $5.85 and Woodside bounded 5.9 per cent to $27.47 as the energy sector paced the market.

The big three paced a broader 5.4 per cent gain for the sector.

Traders also turned bullish on the materials sector, although gains of 2.3 per cent were mild in comparison.

BHP Billiton jumped 4.4 per cent to $18.87, Rio Tinto lifted 3.2 per cent to $44.79 and iron ore miner Fortescue added 3.7 per cent to $3.36.

Gold stocks bucked the trend as interest in the safe haven precious metal waned.

Newcrest, the nation’s largest player in the space, dipped 2.5 per cent to $21.85, while Regis Resources slumped 3.3 per cent to $3.27.

Given the major banks are seen among the biggest potential losers from a Brexit owing to the risks to global financial stability, it was no surprise to see them join in the broad rally.

ANZ lifted 2.7 per cent to $23.86, CBA climbed 3 per cent to $74.20, NAB advanced 2.8 per cent to $25.75 and Westpac was up 2.8 per cent to $29.47.

The financial sector rose 2.3 per cent more broadly.

In company news, Metcash shares plunged over 12 per cent to $1.86 as the finer details of a swing to profit for the full-year failed to impress investors, while SurfStitch stock tumbled 6.4 per cent to 22c as traders chewed over a restructure of the embattled firm’s US operations by new boss Mike Sonand.

Elsewhere, Crown Resorts underperformed with a gain of 0.7 per cent to $12.99 as Moody’s labelled its demerger plans a ‘credit negative’ event for the group.

Among blue chips, Telstra climbed 1.1 per cent to $5.37, while aviation giant Qantas edged down 0.34 per cent to $2.91 as it was weighed by rising oil prices.

Meanwhile, the Australian dollar was trading at US74.35c at the end of the local session, rallying sharply from US73.79c on Friday.