ASX gains 1 per cent as iron ore and gold soar

The Australian sharemarket has gained more than one per cent for the second straight day, with miners shining after iron ore and gold prices both jumped.

The S&P-ASX200 benchmark index closed on Monday up 55.7 points, or 1.03 per cent, at 5,460.5 points, while the all ordinaries index was up 64.7 points, or 1.18 per cent higher, at 5,557.5.

“The ASX200 has burst out of the gate to begin the new trading week,” IG Markets analyst Kyle Rodda said in a note.

“The index remains trading within its broader range, but ... it’s as much of a buyer’s market today as it has been at any point in the past fortnight.”

A key question will be whether the ASX200 now has the upwards momentum to challenge its April highs this week of around the 5,500 mark, Mr Rodda said.

HG Hiscock Australian equities portfolio manager Hamish Tadgell attributed the mining sector’s gains on Monday to iron ore futures rising as much as US$93 a tonne as the coronavirus spread in the mining-rich region of Para, Brazil.

“I think that along with the fact that the (Chinese) National People’s Congress is starting later this week, and you might see some stimulus plans come out as a result of that meeting,” Mr Tadgell said.

Any boost to China’s economy, and in particular its manufacturing sector, would of course boost Australia’s iron ore miners that export the commodity to China.

Fortescue Metals gained 5.8 per cent to an all-time high of $13.28, BHP gained 4.5 per cent to a two-month high of $33.10 and Rio Tinto soared 5.8 per cent to a one-month high of $90.30.

Goldminers also rallied as the price of the yellow metal climbed to a nearly eight-year high of over $US1,760 an ounce, after Federal Reserve chairman Jerome Powell said in an interview that the US central bank was not out of ammunition “by a long shot” and could do more to help the world’s largest economy.

Newcrest gained 6.7 per cent, Evolution Mining rose 5.9 per cent and Saracen gained 11.3 per cent to an all-time high of $5.62 - which Mr Tadgell attributed in part to talk the goldminer could join the ASX100.

Energy stocks also had a good day, collectively gaining 2.8 per cent as Brent crude rose 2.9 per cent to nearly $US34 a barrel.

Oil Search gained 5.6 per cent, Santos rose 5.9 per cent and Woodside Petroleum rose 2.0 per cent.

But banks weighed on the market, which Mr Tadgell attributed to rising concerns about bad debts.

CBA fell 1.2 per cent to $58.90, NAB declined 1.9 per cent to $15.17, ANZ fell 2.0 per cent to $15.13 and Westpac retreated 2.3 per cent to $14.91.

Macquarie, trading ex-dividend, declined 2.7 per cent to $102.20.

Elsewhere, Village Roadshow gained 20.77 per cent to $2.13 after the theme park and cinema owner entered into exclusive talks to be taken private by Melbourne- based private equity firm BGH Capital for between $2.20 and $2.40 a share, or roughly $450 million.

Elders rose 9.9 per cent to $10.34 after its acquisition of wholesaler Australian Independent Rural Retailers worked out great for the agribusiness, nearly doubling its half-year profit.

Glove manufacturer Ansell gained 4.7 per cent to an all-time closing high of $34.23, up nearly 18 per cent on the year.

Telecommunications provider Superloop jumped 18 per cent to $1.15 after reporting strong third-quarter sales following a surge in traffic driven largely by businesses and schools video conferencing during the pandemic.

The Australian dollar was buying 64.44 US cents , down from 64.62 US cents at the close of trade on Friday.

ON THE ASX:

* The benchmark S&P/ASX200 index closed Monday up 55.7 points, or 1.03 cent, at, 5,460.5 points

* The All Ordinaries closed up 64.7 points, or 1.18 per cent, at 5,557.5 points

* At 1737 AEST, the SPI200 futures index was down one point, or 0.02 per cent, at 5,483 points

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 64.44 US cents, from 64.62 US cents on Friday

* 69.07 Japanese yen, from 69.21 yen

* 59.59 euro cents, from 59.78 cents

* 53.21 British pence, from 52.94 pence

* 108.14 NZ cents, from 107.82 cent.