The Australian sharemarket is recovering from its largest sell-off in 10 weeks, buoyed by a strong session on Wall Street. The S&P/ASX 200 Index rose by 87.80 points, or 1 per cent, to 8866.40. This follows a 90.50 point drop on Monday, driven by heavy selling in gold and silver after speculation around the next chairman of the US Federal Reserve. Ten out of eleven sectors experienced gains.
In the US, major benchmarks rallied overnight following data indicating that manufacturing activity expanded at its fastest pace since 2022, driven by strong growth in new orders. According to Capital.com senior market analyst Kyle Rodda, this has increased optimism about the broadening of the US growth story. This market activity has supported a rotation trade on Wall Street, aiding a market grappling with high tech valuations and narrow leadership.
Financial stocks led the ASX gains, with Commonwealth Bank (CBA) rising by 1.6 per cent, solidifying its position as the index’s largest stock, surpassing BHP. CBA, Australia’s largest bank, provides a range of financial services, including retail, business and institutional banking. The shares of Westpac, ANZ, and National Australia Bank also saw increases of over 1 per cent. Gold miners rebounded from Monday’s sell-off as the precious metal increased by 1.3 per cent to $US4719 an ounce. Newmont climbed 3.2 per cent, Evolution Mining 1.6 per cent, and Northern Star by 1 per cent.
Energy stocks were the only sector in negative territory after Brent crude oil futures fell by more than 4 per cent to $US66.26 per barrel, the largest one-day drop in six months. This decline followed news that Washington was in discussions with Iran, alleviating concerns about immediate supply disruptions. Woodside Energy fell 0.7 per cent and Santos by 0.2 per cent. Elsewhere, NRW Holdings, a civil and mining construction company, gained 4.3 per cent after securing three new civil contracts worth $270 million.
