Australian shares rose on Monday, supported by mining and energy stocks, even as market expectations for a rebound in commodity demand faded after China reaffirmed its stringent COVID-19 containment approach.
The S&P/ASX 200 index closed 0.6% higher at 6,933.70. Last week, the benchmark notched a gain of 1.6%.
Equities across Asia remained resilient even as Beijing disappointed investors hoping for a quick reopening and said it is sticking with a strict COVID-19 containment strategy nearly three years into the pandemic.
“The main thematic is the big bounce in commodities over the weekend,” said Mathan Somasundaram, chief executive officer at Deep Data Analytics.
Speculation that China might open its economy saw copper prices jump 7% on Friday in their biggest one-day rally since 2009, while a range of resources all benefited from hopes of increased demand.
Somasundaram explained that even though China’s zero-COVID stance hasn’t changed, market is betting that supply restrictions will keep commodity prices higher.
“Growth commodities are likely to not hold on to the bounce while defensive commodities like gold is likely to,” he added.
Domestic miners climbed 4.1% and posted the best day since Oct. 4 after iron ore contracts on the Dalian Commodity Exchange extended their rally.
Heavyweights BHP Group and Rio Tinto climbed 5% and 3.8%, respectively.
Australian gold stocks rose 5.2% to close at their highest level since Aug. 25 despite bullion retreating from a three-week high.
Sector major Newcrest Mining advanced 4.2%. Financials fell 1.4% and were the top drag in the benchmark index.
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Shares of Westpac Banking Corp dropped 3.9% after the country’s No. 3 lender reported a drop in its annual earnings.
Energy and healthcare stocks gained 1.4% and 0.4%, respectively, while technology shares declined 2.2%.
New Zealand’s benchmark S&P/NZX 50 index rose 0.5% to end the session at 11,290.34.
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