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(Australian Associated Press)
Investors have pushed the Australian share market to a 30-day high and the Aussie dollar to 75 US cents as the September worries of stalling growth fade.
The ASX200 closed higher than 7400 points on Wednesday for the first time since mid-September, helped by Wall Street optimism about US quarterly earnings.
Bond yields and the Aussie dollar continued climbing as investors bet higher rates will be needed to ease inflation in a re-opening economy.
Bond and foreign exchange investors are doubting the Reserve Bank’s position that a rate rise will not be needed before 2024.
Investsmart market strategist Evan Lucas sided with the central bank.
He said inflation was being caused by supply shortages. The shutdown of economies due to COVID-19 has made getting supply chains back to regular pace difficult.
Mr Lucas did not expect those shortages, which have led to higher energy prices, to last.
“This is a supply crisis, or shortage,” he said.
“It will be rectified quickly as economies come back online next year.”
Rate rises were not necessarily the answer to cooling inflation in this scenario, Mr Lucas said.
While many investors bet a rise will happen earlier than 2024, Mr Lucas could see why others were pushing the share market higher.
“A rate rise will not be material to impact household budgets, so growth assets and equities will still be a decent place to be in 12 months’ time.”
In the latest trading day, investors were most keen on technology and financial shares.
The benchmark S&P/ASX200 index closed higher by 38.8 points, or 0.53 per cent, to 7413.7.
The All Ordinaries closed up 37 points, or 0.48 per cent, to 7727.2.
There has been a flurry of quarterly updates this week as part of annual general meetings.
Companies meeting on Thursday include Crown Resorts, Endeavour Group, Transurban and Wesfarmers.
BHP was best of the big miners after raising an offer to buy all shares in Canadian copper and nickel miner Noront Resources.
The board of the Toronto Stock Exchange company urged shareholders to accept the offer of 75 Canadian cents per share.
BHP shares rose about half a per cent to $38.57.
Flight Centre chose not to forecast full-year profit given the uncertainty over travel.
Company leaders are counting on a rebound in demand to help achieve a return to profitability.
Boss Graham Turner said overseas holiday bookings had surpassed domestic ones for the first time since the start of the pandemic.
Shares were down more than four per cent to $21.65.
Private hospital operator Ramsay Health Care noted that elective surgery in Sydney will be allowed from Monday.
However, coronavirus rules have been tightened in Melbourne. Only some elective surgery is allowed as health workers struggle with an influx of coronavirus patients.
Ramsay said the restrictions and costs of working in a COVID-19 environment would affect earnings.
Shares were up 0.81 per cent to $67.29.
The big four banks as well as Bendigo were all higher. The Commonwealth was best and gained more than one per cent to $105.03.
Online shopping trader Kogan closed inefficient warehouses and reduced costs during its first quarter.
Sales improved by 21 per cent on the same quarter last year but profit fell by one per cent.
Investors were convinced of progress and raised shares by more than six per cent to $11.66.
Beach Energy revealed oil production and sales fell during its first quarter.
The company produced four per cent less oil than in the previous quarter from its Western Flank operation at the Cooper Basin, South Australia.
Sales fell eight per cent despite being offset by higher prices.
Shares dropped more than three per cent to $1.44.
The Australian dollar was buying 74.89 US cents at 1725 AEDT, higher from 74.57 US cents at Tuesday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed higher by 38.8 points, or 0.53 per cent, to 7413.7 on Wednesday.
* The All Ordinaries closed up 37 points, or 0.48 per cent, to 7727.2.
* At 1725 AEDT, the SPI200 futures index was down two points, or 0.03 per cent, at 7382 points.
One Australian dollar buys:
* 74.89 US cents, from 74.57 cents on Tuesday
* 85.74 Japanese yen, from 85.19 yen
* 64.31 Euro cents, from 64.09 cents
* 54.28 British pence, from 54.21 pence
* 104.46 NZ cents, from 104.55 cents.