Article by Matt Bell courtesy of The Australian.
Iron ore miners surged in their best session since November, extending recent share prices gains over the past few months based on optimism that China’s reopening was a win for steel demand.
But strong gains by the miners did not rub off on the rest of the sharemarket, which saw broad falls across nine of the 11 sectors as investors weighed signs of persistent inflation after stronger-than-expected German CPI and US ISM Manufacturing price data.
The ASX 200 edged up 3.8 points to 7255.4 points, while the broader All Ordinaries added 3.9 points to 7460 points.
Singapore iron ore futures held on to much of a 2.5 per cent bounce to $US126.50 a tonne on Wednesday after the first concrete signs of an increase in China’s industrial activity emerged with the manufacturing PMI rising to its highest since 2012.
ANZ senior commodity strategist Daniel Hynes upgraded the bank’s short-term target for iron ore to $US130 a tonne, but said prices would likely fall to $US100 by the year’s end.
“We expect China’s steel output to continue to increase in coming months, as the industry restocks and prepares to meet pent-up demand. And this should support iron ore prices coming into Q2,” he said.
“We don’t see this strength persisting through to the end of the year. A combination of underlying issues in the property sector should limit the upside to demand. We also expect supply side issues to ease over the year.” Shares in BHP jumped 4 per cent to $48.05, after they fell to a three-month low on Monday. Fortescue Metals rose 4.3 per cent, Rio Tinto rallied 4 per cent and Mineral Resources added 4.6 per cent.
Energy was the only other sector to end higher as Woodside firmed 2.2 per cent to $37.59 after another rally in crude oil on Chinese demand hopes.
Financials were the biggest laggard as investors dumped the banks and followed the money into the miners. ANZ dropped 2.7 per cent to $23.71, Westpac and Commonwealth Bank lost 2 per cent and NAB fell 1.9 per cent.
Lynas Rare Earths was the biggest laggard on the bourse falling 6.8 per cent, while Karoon Energy fell 3.6 per cent to $2.16 after Brazil slapped the oil producer with a 9.2 per cent tax on oil export volumes for four months from March 1 to June 30.
St Barbara fell 3.5 per cent to 55c as it told the market it would stop production early next year at its Touquoy open pit gold mine in Nova Scotia for “care and maintenance”.
Lithium player Pilbara Minerals lost 3.1 per cent to $4.08 after major Chinese shareholder Contemporary Amperex Technology sold a $601m block of shares.
Coles lost 3.2 per cent Woolworths fell 1.4 per cent after both went ex-dividend.
Bell Potter director of institutional sales Richard Coppleson said despite an “underwhelming reporting season, dividends to be paid out by listed companies over the next month would be $36.27bn versus $36.32bn last year – the second best February on record.
Domino’s Pizza jumped 1.5 per cent to $49.60 as the chain’s managing director, Don Meij, sold $8.25m of shares in the company.
Star Entertainment surged 4.2 per cent to $1.50 as the casino operator opens its retail offer to raise about $800m. The dollar was buying around US67.3c at the close.