ASX Soars As Wall Street Rebounds With Fury Following Inflation Sell-Off

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Australia’s share surged today, with financial, tech, and energy companies leading the charge. The sharp rally followed Wall Street’s rebound from an initial sell-off caused by new data showing record-high inflation in the US.

“Investors are now betting that the Federal Reserve will continue its current policy of low-interest rates to support the economy,” said one analyst.

The ASX 200 closed at 6,759, an increase of 116 points or 1.8%. The Australian dollar was up to 63.28 US cents by 4:05 pm AEDT.

Although it took a nose-dive Thursday night, plunging towards 61.70 US cents (the lowest level since 2020), it rebounded following the stronger-than-expected US inflation report.

The energy and utility sectors were the biggest gainers, finishing at 3.7% and 3.5%, respectively.

 Virgin Money rose 9.5 per cent, outperforming the benchmark stock index.

The economy progressed today as the country’s leading banks saw an increase in stocks by 1.6%. The “big four” lifted anywhere from 0.4% to 1.9%.

Woodside Energy and Santos saw a 4 per cent and 4.4 per cent stock rise due to higher oil prices.

The stocks of technology companies increased by 1.7 per cent, the best session since early October, following the Nasdaq Composite index, which had similarly impressive gains.

Although iron ore prices dived, miners’ 1.2 per cent advances show that heavyweights BHP, Fortescue and Rio Tinto refuse to be pushed down easily, adding between 0.7 per cent and 2 per cent throughout the day.

On the other hand, gold stocks lost 1.3 per cent, Newcrest Mining and Northern Star Resources included in those shedding 1.2 per cent and 1.9 per cent, respectively.

Qantas shares soared 3.2 per cent after the airline issued a stronger-than-expected profit forecast, prompting multiple brokerages to raise their price targets.

On Friday, Insurance Australia Group (IAG) stopped trading after the High Court rejected more appeals for pandemic insurance.

The company said in a statement that the trading halt enabled it to “rethink the implications of a High Court ruling. The applications were IAG and policyholders for special leave to appeal Full Federal Court’s judgement from February 21, 2022.”

The ruling was disastrous for small businesses still waiting on their insurance payouts.

The company’s shares will be suspended from trading until it announces the financial impact of the High Court determination.

“Investors should not be surprised to see IAG’s share price drop upon resumption of trade, with key unknowns still surrounding the company’s future pandemic-related losses,” said CMC Markets chief market strategist Michael McCarthy.

Wall Street’s rebound from its inflation sell-off boosted Australian stocks and the local currency. However, uncertainty remains in the market as investors closely monitor inflation levels and their impact on interest rate hikes.

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