ASX extends records on commodities surge: Wednesday 2 June

Steven Deare
(Australian Associated Press)

 

Shares hit record heights for the second time this week on the Australian market, after investors could not resist materials and energy stocks.

The ASX200 had an all-time high (7218.9 points) and record close after materials shares rose 1.92 per cent and energy shares gained 4.05 per cent.

Investors seem unconcerned by a seven-day coronavirus lockdown being extended for people in Melbourne.

The benchmark S&P/ASX200 index closed higher by 75.2 points, or 1.05 per cent, to 7217.8 on Wednesday.

The All Ordinaries closed up by 76.8 points, or 1.04 per cent, to 7468.9.

Materials shares, a large part of the market, surged after iron ore prices returned to heights of about $US200 per tonne.

BHP climbed 3.09 per cent to $49.39. Fortescue rose 2.02 per cent to $23.28. Rio Tinto gained 1.89 per cent to $126.95.

Chinese authorities in May declared a crackdown on rising commodities prices.

However ANZ senior commodity strategist Daniel Hynes said he doubted those efforts would have much success.

He said iron ore prices could go as high as $US215 per tonne in the next three months.

Chinese steel-makers continue to demand iron ore as the nation’s economic resurgence from the pandemic continues.

However Mr Hynes said government stimulus was fuelling the resurgence and would not last.

He expected prices to drop to about $US150 per tonne by the end of the year.

OPEC chose not to increase oil supply by more than planned, which prompted prices to rise.

Producers stuck to an April plan to return 2.1 million barrels per day (bpd) of supply during May through July as they anticipate demand will increase.

Energy shares reaped the rewards of higher prices:

* Santos gained 6.51 per cent to $7.36.

* Worley jumped 6.47 per cent to $11.19.

* Woodside rose 4.61 per cent to $23.13.

Utilities shares rose 2.64 per cent. Origin climbed 5.76 per cent to $4.22.

There were gains of more than one per cent for property, industrials and consumer stocks.

The only shares lower were technology (1.09 per cent) and healthcare (0.48 per cent).

US markets provided a weak lead as investors weighed the latest economic data for signs of a rebound and rising inflation.

US manufacturing activity picked up in May as pent-up demand in a reopening economy boosted orders.

Unfinished work piled up because of shortages of raw materials and labour.

Melbourne’s extended lockdown seemed not to manifest itself in the market.

Victoria recorded six local infections, giving the outbreak 60 active infections.

Victorians outside Melbourne will enjoy more freedom from Friday as the threat is greatest in the city.

There was better news for the national economy.

It grew by 1.8 per cent in the March quarter and returned to pre-pandemic levels.

The main contributors were private business investment, housing investment and household spending.

On the ASX, engineering group CIMIC said subsidiary UGL won a $150 million deal to install a transmission line in Queensland.

The line will connect the Kidston Clean Energy Hub to the national electricity grid for client Powerlink.

UGL will also build a switching station at Mt Fox.

CIMIC shares were higher by 2.93 per cent to $21.46.

In banking, the big four were all higher.

The Commonwealth was best and rose 0.87 per cent to $100.33.

On Thursday, Australia’s April trade surplus is expected to be about $8 billion.

This would be a substantial increase on the $5.3 billion of March.

The Australian dollar was buying 77.35 US cents at 1708 AEST, lower from 77.39 US cents at Tuesday’s close.

ON THE ASX

* The benchmark S&P/ASX200 index closed higher by 75.2 points, or 1.05 per cent, to 7217.8 on Wednesday.

* The All Ordinaries closed up by 76.8 points, or 1.04 per cent, to 7468.9.

* At 1708 AEST, the SPI200 futures index was unchanged and trading at 7213.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 77.35 US cents, from 77.39 cents on Tuesday

* 84.89 Japanese yen, from 84.84 yen

* 63.36 Euro cents, from 63.37 cents

* 54.67 British pence, from 54.44 pence

* 106.96 NZ cents, from 106.48 cents.

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