ASX breaks two-day losing streak

The benchmark S&P/ASX200 index closed 0.66 per cent higher at 7438.9, while the All Ordinaries Index put on 0.67 per cent to 7762.2.

IG market analyst Kyle Rodda said the US market rise came after Federal Reserve chair Jerome Powell acted as “Soother in Chief” overnight in his second term swearing in ceremony, taking a hard line on inflation but reassuring that the Fed remained wary of the market’s reactions to policy tightening.

But the Fed had been “notoriously poor in anticipating inflation”, Mr Rodda said, and the latest US CPI figures due on Wednesday night were tipped to show 7.1 per cent price growth – a 40 year high.

OMG chief executive Ivan Tchourilov agreed the US Fed’s response to inflation had abated a lot of fear in the market, much to the pleasure of those who had been buying the dip the past few days.

“The general consensus is tight supply across several areas while Omicron fails to dent demand, while the resource-heavy ASX will directly benefit from inflated pricing,” he said.

Fast food companies retreated after poultry producer Inghams on Monday said the significant impact of Omicron on its staffing and supply chain had led to the “temporary suspension” of certain products and it was “focused on supplying as much product as possible to customers”.

Collins Foods, a KFC franchisee in Australia, dipped 1.95 per cent to $12.06, while Domino’s Pizza fell 4.19 per cent to $1067.50.

The top gainers were mainly in the mining sector, with Blackstone Minerals rocketing 24.14 per cent to 72 cents and Nickel Mines advancing 7.56 per cent to $1.56.

Australasian Metals surged 10.08 per cent to 65.5 cents after acquiring lithium exploration ground in the Northern Territory.

Liontown Resources gained 5.16 per cent to $1.63 after inking a lithium spodumene concentrate sales deal with South Korean-based LG Energy Solution, underpinning the development of its Kathleen Valley project in Western Australia.

Fortescue pulled back 1.14 per cent to $20.88 after Citi downgraded the iron ore miner to a sell rating, saying its share price run had implied “unreasonable” valuation expectations for its new, green-focused Fortescue Future Industries division.

To fill the valuation gap, FFI would need 20 hydrogen energy projects costing more than $US20bn to develop, Citi said.

“At this early stage and with no visibility, this seems a bridge too far,” it said.

Citi also said it was hard to overlook key staff departures.

With the iron ore price increasing to about $US128 per tonne, Rio Tinto rose 0.85 per cent to $107.27 and BHP gained 1.05 per cent to $45.12.

The energy sector was the best performer on the back of a higher oil price, with Woodside lifting 4.1 per cent to $24.35, Santos appreciating 3.56 per cent to $6.98 and Beach Energy jumping 5.34 per cent to $1.38.

Gold shone brightly amid rising prices for the precious metal, with Kingsgate Consolidated rallying 11.52 per cent to $2.13 and Newcrest appreciating 2.32 per cent to $24.75.

Helped by strong gains on the Nasdaq, buy-now-pay-later provider Afterpay cleared the final hurdle for its takeover by US tech giant Block, formerly Square, with the Bank of Spain granting approval after a month-long delay.

Afterpay shares, which will cease trading on the ASX on January 19, climbed 4.75 per cent to $77 – a far cry from last year’s peak of almost $160.

Consumer staples were once again the worst performing sector, with IGA parent company Metcash losing 2.34 per cent to $4.17, Coles dipping 0.84 per cent to $16.51 and Woolworths sliding 0.74 per cent to $36.06.

Mr Tchourilov said TPG Telecom led the communications sector higher, rising 4.96 per cent to $6.14.

“A bullish note from Bloomberg speculated depressed pricing could result from former chairman David Teoh offloading a large holding,” he said.

“The offload is to fund a purchase of more Tuas, a Singaporean spin-off of TPG that was recently demerged.

“The note expressed no change in underlying fundamentals and that the basic supply-demand movement has left TPG severely undervalued.

“The market has slowly picked up on the note.

“Set to compete with NBN and Telstra, TPG’s national 5G rollout, when finalised, will spread profit margins wider than those currently provided by NBN.”

ANZ put on 0.11 per cent to $28.03 and Commonwealth Bank added six cents to $101.26, while National Australia Bank and Westpac were unchanged at $29.24 and $21.67, respectively.

The Aussie dollar was buying 72.17US cents, 52.89 British pence and 63.42 Euro cents in afternoon trade.

Originally published as ASX breaks two-day losing streak, boosted by commodity prices, positive US lead after ‘soothing’ Fed comments