Resources rally lifts stocks

Fresh optimism around resources and materials has driven a firm rebound in the local market.

The Australian share market rallied today following a poor start to the week, as the resources sector’s return to form helped defy offshore jitters around Donald Trump’s policies.

The S&P/ASX 200 finished the session 0.6 per cent higher at 5653.2 points, rebounding from a cumulative 1.6 per cent loss over Monday and Tuesday. The broader All Ordinaries index closed 0.51 per cent stronger, at 5,704 points.

Energy and materials sectors led the rally, gaining 1 per cent and 0.8 per cent respectively, while financial stocks rose 0.5 per cent.

“Buying support for mining stocks has offset ongoing profit taking in banks, allowing the ASX 200 index to nervously hold the line in early trade following two weak days,” CMC Markets chief analyst Ric Spooner said.

Elsewhere, the falling US dollar was front of mind for the market, with Donald Trump turning up the heat on currency markets with remarks suggesting Japan, China and Germany were benefiting from weaker currencies. The US dollar slipped to two-month lows on his comments.

“The US Dollar Index is now 4 per cent below its January peak and only 1.7 per cent above its level immediately before the US election,” Mr Spooner said.

“Whether by design or by accident, these statements have been well timed. As central banks have learned, statements about a currency’s valuation tend to have greatest impact when markets have already begun moving in the desired direction or are showing signs of losing momentum.

“These statements have added to existing downward momentum in the US dollar as markets re-asses their previous unambiguously pro-growth view of the Trump administration.”

Mr Spooner adds that the downward move in the US dollar increases the possibility for volatility around the statement from the Federal Reserve’s policy meeting, due on Thursday morning.

If the Fed was to open a conversation about moving to run down its asset holdings, the dollar could react positively.”

Among the major miners, BHP jumped 1.65 per cent to $27.08 and Rio Tinto stepped up 0.54 per cent to $67.04, supported by base metals prices. Fortescue swelled 2.25 per cent to $6.81.

Meanwhile Westpac was the best performing of the big four, as it grew 0.88 per cent to $31.99. ANZ made 0.51 per cent to $29.44, Commonwealth Bank lifted 0.44 per cent to $82.02, National Australia Bank added 0.43 per cent to $30.46.

Elsewhere GUD Holdings turned up 3.8 per cent to $10.08 after lifting net profit for the first half of the year. The group revved up first-half performance in its automotive parts division, while its cleaning products company Oates was swept up in the malaise that hit hardware retail following the collapse of Woolworths’ Masters business.

Sirtex lost 1.1 per cent, to $14.22 after announcing it would “strongly defend” possible legal action against it. It came as lawyers alleging the biotech misled investors on sales forecasts set a deadline for settlement talks.

And digital real estate advertising company REA Group slipped 0.4 per cent, to $52.36, after selling its European businesses to private equity investor Oakley Capital.

The Australian dollar was little changed in the local session, despite global forex shifts around Mr Trump’s comments.

At 4pm (AEDT), the Australian dollar was at US75.60 cents, compared with US75.66c in late on Tuesday.

with AAP