Stocks swing into the black, end firmly higher

The local market has swung to a firmly positive close, as materials strength outweighed concerns around US political risk.

The Australian sharemarket has shunned a negative market lead from the US and weakness across Asia to surge higher on the first trading day of the week.

Investors were encouraged by Qantas’ quarterly update as well as rising iron ore and copper prices, as they discounted the risks associated with a potential Donald Trump presidential victory in the US.

At the close, the benchmark S&P/ASX 200 index jumped 33.9 points, or 0.64 per cent, to 5,317.7, while the broader All Ordinaries index surged 31.5 points, or 0.59 per cent, to 5,402.4.

The action shows a significant swing from a flat open and represents a rebound from a soft result last week, when more than 2.5 per cent was stripped from the market as it underperformed its global peers.

Local macroeconomic news is set reclaim the spotlight this week as the Reserve Bank prepares to deliver its annual rates call on Tuesday, with traders betting on a hold.

“Incredibly six economists (including St George and CBA) are calling for a cut, which can only be described as a huge contrarian call given the 6 per cent probability priced into the interest rate markets,” IG chief market strategist Chris Weston said.

“I can’t see it happening myself, but a cut tomorrow would see the Australian dollar chopped up.”

In the meantime investors shone the spotlight on the materials space, which benefitted from a fresh six-month peak in iron ore prices.

“Further gains in iron ore and a strong jump in the copper price will again create doubts about whether traders can sustain a bearish view on this sector,” CMC Markets chief market analyst Ric Spooner said.

Fortescue led the way for much of the session but faded at the close, inching down 0.2 per cent to $5.50.

However, heavyweight BHP climbed 0.4 per cent to $23.07 and Rio Tinto advanced 0.8 per cent to $54.18.

The energy sector also recorded gains, although sentiment was comparatively subdued as crude prices skidded on worries about the OPEC supply deal.

“The weekend OPEC meeting in Vienna has failed to show any cohesion between the OPEC members and there is no meat on the bone around the allocation of supply cuts for traders to really feel enthused,” Mr Weston said.

Santos gained 0.3 per cent to $3.57. Origin dipped 0.6 per cent to $5.35 and Woodside tacked on 0.2 per cent to $28.37. The sector saw a strong turnaround from a red open.

The finance sector also gained after a lacklustre open, with a positive response seen to a sale of ANZ’s retail and wealth operations in Asia.

ANZ lifted 0.8 per cent, as did Commonwealth Bank and Westpac, while NAB lagged with a 0.3 per cent rise.

Crisis-hit Ardent Leisure continued its slide, falling 1 per cent.

Among blue chips, Telstra climbed 0.6 per cent to $4.98, while Qantas bounded 4.1 per cent to $3.06. The national carrier plunged as much as 9 per cent in morning deals as it warned on weaker first half profit, but quickly won supporters as the meat of its quarterly report was analysed.

Meanwhile, the Australian dollar climbed above US76c, edging up US0.2c to US76.1c by the end of the local session.