Australian shares have finished their week moderately higher, with mining and energy stocks driving much of the gains.
- The ASX 200 has risen 14.2pc since the year began
- The Australian dollar has fallen sharply since its February high (80 US cents)
- Japan’s Topix index hit a 30-year high on reports Prime Minister Yoshihide Suga is resigning
The ASX 200 rose by 0.5 per cent to close at 7,523 points, clawing back some of its losses from the past couple of days.
In the past week, the benchmark index has gained 0.5 per cent.
But its performance paled in comparison to the Japanese stock market, which surged to a 30-year high on Friday.
Japan’s Topix index vaulted as much as 1.7 per cent to 2,018 points, a level last seen in April 1991.
The Nikkei had jumped 2 per cent to 29,111 by 4:25pm AEST, its highest level since June
It follows local reports that Prime Minister Yoshihide Suga has offered to resign, opening the way for a fresh government that could help the ruling party win an upcoming election.
Mr Suga’s approval rating has plunged below 30 per cent, as has faced intense criticism for his handling of the economy, COVID-19 pandemic and Tokyo Olympics.
“Suga’s decision not to run for the leadership of the LDP [Liberal Democratic Party] reduces the risk of a big loss at the next general election,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.
“That has given relief to market participants in Japan.”
The Japanese leader announced on Friday he would not run in a ruling party leadership race in September, setting the stage for his replacement after just one year in office.
Tokyo’s market has been rallying this week on hopes for a stronger government ahead of a ruling party leadership race and a general election later this year.
Aussie dollar jumps to seven-week high
The Australian dollar lifted to 74.2 US cents, up 0.6 per cent, its strongest level since mid-July.
It was simply boosted by a weaker US greenback, which slipped to its lowest point in about four weeks.
“We expect the Australian dollar to trade in a tight range ahead of non‑farm payrolls (as is usual),” Commonwealth Bank currency strategist Joseph Capurso wrote in a note.
He was referring to a key jobs report from the US Labor Department, which will be published at 10:30pm AEST on Friday.
The new data will reveal how many jobs were added to the US economy last month, along with the unemployment rate.
It will set the stage for the US Federal Reserve’s policy meeting later this month, as investors look for clues on when exactly the central bank will start winding back its massive stimulus program.
“A strong non‑farm payrolls result in line with our estimate would push the AUD/USD lower tonight,” he added.
Meanwhile, on the local share market, many of the best performers were energy, mining and healthcare stocks like Whitehaven Coal (+6.8pc), Orocobre (+7pc), Alumina (+6.7pc), Lynas Rare Earths (+3.4pc), Mesoblast (+5.9pc) and Clinuvel Pharmaceuticals (+6.3pc).
On the flip side, Afterpay (-2.8pc), BlueScope Steel (-3pc), Polynovo (-1.8pc), Nearmap (-1.9pc), Endeavour Group (-2.2pc) and Monadelphous (-1.6pc) experienced heavy losses.
Markets boosted by oil surge
The Australian market followed a strong lead from Wall Street, which hit fresh record highs.
Overnight, the S&P 500 gained 0.3 per cent to 4,537 points, while the tech-heavy Nasdaq Composite rose 0.1 per cent to 15,331. Both indices closed at their highest levels ever.
The Dow Jones Industrial Average gained 0.4 per cent to 35,442.
“Were it not for a 2.5 per cent jump in the energy sub-sector, the S&P 500 would almost certainly have finished just in the red rather than just in the green,” said Ray Attrill, NAB’s head of foreign exchange strategy.
“Oil-related stocks are higher with oil prices, as 94 per cent of Gulf of Mexico crude production remains shut even though the storms created by Hurricane Ida have left the area.
“The oil market has also taken the agreement this week by OPEC and friends to lift production from October comfortably in its stride being very much ‘as expected’.”
Brent crude futures lifted to $73.16 a barrel, up 2 per cent.
MSCI’s world stock index, which measures equity performance in 50 countries, rose 0.2 per cent to its highest level ever.
US job lay-offs fall to 24-year low
Despite surging COVID-19 infections, investor sentiment was propped up by some better-than-expected US labour market figures.
The number of unemployed Americans filing new claims for jobless benefits fell last week to 340,000, the lowest level in 17 months, according to the latest US Labor Department numbers.
Meanwhile, job cuts announced by US-based employers fell by 17 per cent in August (to 15,723), according to a report by global outplacement firm Challenger, Gray & Christmas.
This was the lowest monthly figure in 24 years — since June 1997 to be precise.
Spot gold was steady at $US1,813 an ounce. Iron ore fell by 1 per cent to $US142.02 a tonne.
Aluminium prices rose to a 10-year high on growing concerns that restrictions on Chinese production of the metal are causing supply shortages.