Bulls charge market to higher close
A flat, quiet session was expected ahead of the US market holiday tonight but the bulls took the opportunity to lift the Australian sharemarket sharply higher.
There were no obvious catalysts, but the S&P/ASX 200 climbed 56.7 points, or one per cent, to 5721.5 on volume about 30 per cent below average, with all sectors finishing firmly in the black as investors shrugged off US rate rise expectations.
US Federal Reserve chairwoman Janet Yellen said on Friday she expected to begin normalising monetary policy with a rate rise later this year if the US economy continued to improve.
The Australian dollar dropped US1¢ to US78.20¢ following her comments, but government 10-year bond yields were little changed at 2.914 per cent as US 10-years also traded little changed at 2.21 per cent.
A broad US dollar rally was underpinned by a 0.3 per cent rise in US core consumer prices, the strongest since November 2013. The biggest driver was ‘owners’ equivalent rent’, a measure of housing costs, and which makes up 31 per cent of the core CPI measure. Healthcare and health insurance costs were the other major components.
“The overall sense here is that the ongoing impact of lower oil prices on inflation in general, and of dollar strength on tradeable goods prices in particular, is no longer sufficient to prevent core inflation rising and led by services,” National Australia Bank global head of currency strategy Ray Attrill said.
The Shanghai composite index leapt another 3 per cent at the close of the ASX, diverging sharply from other mainland exchanges as investors bailed out of small caps stocks which had strongly outperformed this year.
In Tokyo the Nikkei index was up 0.7 per cent.
Spot iron ore bounced 3.8 per cent to $US59.96 a tonne and Dalian iron ore futures were up 1.2 per cent today.
Trading volumes were low ahead of the Memorial Day holiday in the US on Monday, OptionsXpress market analyst Ben Le Brun said.
"I think it’s a story of bargain hunters swooping on some of these beaten up stocks, and also we’ve seen quite a lot of M&A (merger and acquisition) action today as well,” he said.
Almost all sectors of the market rose, including the big banks and resources stocks.
Aspiring nickel miner Sirius Resources soared 66 cents, or 20.4 per cent, to $3.90 after it received a $1.8 billion takeover offer from gold, nickel, zinc and copper producer Independence Group.
Also in the mining industry, gold miner Evolution Mining is buying the Cowal gold mine in central NSW for $US550 million.
Its shares were halted from trade at $1.175 as it raises capital to help fund its deal.
Workforce provider Skilled Group surged 14.5 cents, or 11.8 per cent, to $1.375 as it confirmed it was in merger talks with rival Programmed. Programmed was 11 cents lower at $2.51.
Among the banks, Commonwealth Bank ascended 89 cents to $84.00, ANZ advanced 27 cents to $32.32, Westpac improved 40 cents to $32.96 and National Australia Bank strengthened 30 cents to $33.53.
BHP Billiton added 23 cents to $29.48, Rio Tinto put on 88 cents to $57.63 and Fortescue Metals was six cents higher at $2.17.
Telstra rose eight cents to $6.28.
The broader All Ordinaries index was up 51.7 points, or 0.91 per cent, to 5719.9 points.
The June share price index futures contract was 53 points higher at 5735 points, with 18,120 contracts traded.
National turnover was 1.6 billion securities worth $3.38 billion.
