As we enter the final quarter of 2020, the Aussie market is off to a much brighter start to October compared to its finish to September. The ASX 200 is rebounding from the 2.3% slide yesterday and is now 88pts or 1.5% higher to 5,903 heading towards midday. This follows a more optimistic tone on US markets overnight which had rallied on hopes of US Congress getting closer to another stimulus package to help boost the economy.
Locally, gains are across all sectors with broad based improvements. The materials sector is the standout following a solid lift in iron ore prices, with a gain of 3.5% before China goes into a week long holiday for the Golden Week holiday. Chinese steel demand is expected to remain resilient for the remainder of the year on strong infrastructure spending. BHP Group (BHP) is leading the major miners higher with a 3% lift. Both Rio Tinto (RIO) and Fortescue Metals (FMG) are also rising at least 2%.
The other heavyweights in financials and healthcare are also contributing to the wider improvements while the energy sector is bouncing back from its sharp decline yesterday. Santos (STO) is 0.8% higher having drifted by 3.9% yesterday as the oil and gas producer received regulatory approval for its Coal Seam Gas (CSG) project in Narrabri, NSW. STO would still need to meet certain criteria and conditions before it can start construction and production.
Travel group, Flight Centre (FLT) is looking to close another 90 stores as the ongoing COVID19 pandemic cripples the tourism industry. FLT is also expecting demand for leisure travel to not fully recover until FY23-24 unless there is an effective vaccine. FLT shares are up 2%
The Commonwealth Bank (CBA) also released an August update on its loan deferrals following APRA’s release yesterday. CBA had roughly 170,000 loans in deferral in August, down from 182,000 in July with the loan balances down to $59 billion from $62 billion. CBA is 1% higher.
The Aussie dollar is also firming to 71.72 US cents on some US dollar weakness. AUD could move depending on what the RBA does with interest rates when it meets next Tuesday. So far, 2.1b units have changed hands worth $2b with 745 stocks higher, 347 lower and 315 unchanged.
Published by CommSec