Australian Market Sharply Higher

The Australian stock market is sharply higher on Wednesday, recouping some of the losses of the previous two sessions, with the benchmark S&P/ASX 200 breaking above the 7,300 level, following the broadly positive cues overnight from Wall Street. Traders are optimistic about domestic economic recovery after the minutes of the RBA’s July policy meeting showed that the economic recovery in Australia has been stronger than earlier expected and is forecast to continue.

Traders are also picking up stocks at reduced levels after recent drops, even amid concerns about the worsening domestic coronavirus situation in New South Wales, Victoria and South Australia, with the more contagious Delta strain spreading.

Victoria has recorded 22 new local cases of coronavirus, with the total active cases reaching 118 and the fifth lockdown extended for a further seven days. New South Wales reported 110 new local cases and South Australia reported 3 new cases on the second day of lockdown.

The benchmark S&P/ASX 200 Index is gaining 102.20 points or 1.41 percent to 7,354.40, after touching a high of 7,354.80 earlier. The broader All Ordinaries Index is up 104.30 points or 1.39 percent to 7,630.10. Australian stocks ended modestly lower on Tuesday.

Among major miners, BHP Group and Fortescue Metals are gaining almost 2 percent each, while Rio Tinto, OZ Minerals and Mineral Resources are adding more than 1 percent each.

BHP is reportedly reviewing its petroleum business and considering options including a trade sale, to get out of oil and gas in a multibillion-dollar exit that would accelerate its retreat from fossil fuels.

Oil stocks are higher after crude oil prices rebounded to climb overnight. Oil Search is gaining almost 3 percent, while Origin Energy, Santos and Woodside Petroleum are adding more than 1 percent each. Beach energy is flat.

Beach Energy reported a 7 percent increase in fourth-quarter sales revenue to $421 million, benefiting from rising oil prices, but ended up producing less oil than last fiscal year.

In the tech space, WiseTech Global and Appen are edging up 0.2 percent each, while Xero and Afterpay are gaining more than 1 percent each.

Among the big four banks, Westpac and Commonwealth Bank are gaining more than 1 percent each, while ANZ Banking and National Australia Bank are adding almost 2 percent each.

Among gold miners, Evolution Mining is losing almost 2 percent, while Resolute Mining is down more than 2 percent. Northern Star Resources, Newcrest Mining and Gold Road Resources are edging down 0.5 percent each.

In other news, shares in CIMIC are gaining more than 4 percent after the construction and infrastructure giant reinstated its interim dividend following strong first-half revenue growth.

South African-owned upmarket department store David Jones has reported a strong second half to the financial year, telling investors late last night its sales had increased by 17 per cent over the period

In the currency market, the Aussie dollar is trading at $0.733 on Wednesday.

On Wall Street, stocks moved sharply higher over the course of the trading day on Tuesday, regaining ground following the sell-off seen in the previous session. The major averages all showed strong moves back to the upside but remain well off their record highs.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Dow spiked 549.95 points or 1.6 percent to 34,511.99, the Nasdaq surged up 223.89 points or 1.6 percent to 14,498.88 and the S&P 500 jumped 64.57 points or 1.5 percent to 4,323.06.

The major European markets also rebounded after ending the previous session sharply lower. While the French CAC 40 Index advanced by 0.8 percent, the German DAX Index and the U.K.’s FTSE Index climbed by 0.6 percent and 0.5 percent, respectively.

Crude oil futures rebounded on bargain hunting on Tuesday, even amid concerns about the outlook for energy demand and possible oversupply in the market. West Texas Intermediate Crude oil futures for September, the new front month contract, ended up $0.85 or 1.3 percent at $67.20 a barrel.

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