Australian share market books strongest week since July as miners, energy stocks rally

In a week dominated by expectations of rate cuts from the US Federal Reserve in 2024, a rally in mining and energy stocks pushed the benchmark to a 20-week high on Friday

The Australian sharemarket was bolstered by a rally in mining and energy stocks on Friday, pushing the benchmark to record its strongest weekly gain since July, up 3.4 per cent.

At the closing bell, the S & P/ASX200 added 0.9 per cent, or 64.8 points, to reach a 20-week high of 7,4442.7. Meanwhile the broader All Ordinaries rose by 0.8 per cent to reach 7,661.9.

The Australian dollar continued to rise, adding 0.3 per cent to reach US 67.1c at the closing bell.

But AMP chief economist Shane Oliver said numerous headwinds were putting the share market at risk.

“Shares remain vulnerable to concerns about sticky inflation, recession fears, worries about the Chinese economy and geopolitics,” Dr Oliver said.

Overnight on Wall Street, the Dow Jones climbed to reach its highest level ever. Picture: AFP / Angela Weiss

However, stocks were “likely to see more upside in the months ahead,” Dr Oliver added, as a combination of easing inflation, less restrictive monetary policy and positive share market seasonality remained in place.

“While we should expect lots of bumps along the way, our base case remains that global and Australian shares can trend up,” he said.

It followed a record-breaking session on Wall Street overnight, with the Dow Jones index adding 0.4 per cent to 37,248.35 – its highest ever. The S&P500 and the NASDAQ also rose, firming 0.3 per cent and 0.2 per cent, respectively.

With traders trimming their bets of further tightening by the Federal Reserve in the new year, yields on the 10-year treasury sank to 3.9 per cent.

Locally, Material stocks were the top gainers, adding 1.9 per cent, as prices for key commodities rose as the greenback slid.

Sector heavyweight BHP added 2.2 per cent to $49.29, Rio Tinto climbed 1.9 per cent to $132.46, and Fortescue shares jumped 1.2 per cent to $27.80 – a record high – as iron ore hovered just below $US135 a tonne on the Singapore exchange for the January contract.

After surging in trade on Thursday, real estate stocks shed 0.5 per cent. Goodman Group fell 1.8 per cent to $24.12 and Charter Hall lost 0.8 per cent to $12.24. However, Lendlease rose, adding 2 per cent to $7.51.

In company news, embattled pathology provider Healius dropped 0.7 per cent to $1.51 after smaller rival Clinical Labs said it was planning to withdraw its $15.2bn takeover bid for the firm. The development comes after the ACCC opposed the merger on the grounds it would substantially reduce competition in the pathology services market.

Traders are nervous that a proposed merger between Sigma Healthcare and Chemist Warehouse could be kiboshed by the competition regulator. Picture: NCA NewsWire/Tertius Pickard

Sigma Healthcare sank 6.7 per cent to 98c. The company is planning to merge with discount pharmaceuticals retailer Chemist Warehouse, however the takeover will require approvals from the competition watchdog, spooking investors.

Real estate company Dexus said the book value of its portfolio sank by 5.2 per cent for the first half of this financial year, according to draft third-party independent valuations. Shares dropped 3 per cent to $7.70.

Shares in buy-now pay-later firm Zip vaulted 17.8 per cent to 63c, the highest since early February. Google Pay has announced a partnership with the firm to rollout BNPL services in US markets from 2024.

Originally published as Australian share market books strongest week since July as miners, energy stocks rally