The ASX is Up 0.3 Percent as Iron Ore Prices Rise

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China’s decision to loosen CoViD restrictions has created a positive ripple effect especially to ASX firms.

The one of the world’s highest steel production, China, has decided to loosen their CoViD restrictions after quite some time now. As a result, on Monday, December 5, the Australian stock exchange closed higher as iron ore prices rose giving a brighter outlook for the global economy.

Reports that Beijing may decrease the virus’s threat rating, just days after unprecedented protests against Xi Jinping’s zero-COVID policy, raised investor interest in stocks.

Hong Kong equities gained 3.5%, while Chinese blue chips gained 1.7%. China’s improved attitude towards the pandemic has created a ripple-effect reaching other countries including Australia. S&P/ASX 200 settled 0.3%, or 24.1 points, higher at 7325.6 points, close to a six-month high reached last week. All Ords increased by 0.3%, or 24.3 points, to 7527.8.

The index’s standout was Fortescue Metals, which rose 6.9 percent to $21.03, a level last reached in June. Rio Tinto rose 3.7% to $116.13, while Champion Iron rose 2.2% to $6.9. BHP Group increased by 2.3% to $46.81. 

According to ANZ Bank senior commodity strategist Daniel Hynes, iron was bolstered by China’s measures to support its struggling property sector. “These measures should have a better chance of developing into stronger demand for steel and iron ore,” he said. China is Australia’s largest buyer of commodities,” he stated.

Warrego Energy, a gas company, increased 11.7 per cent to close at 31.5¢. Beach Energy’s stock rose 5.3 percent to $1.895. 

Following a weekend fire at its Nova mine, battery materials supplier IGO fell 4.9 percent to $15.54. All operations at the nickel-copper-cobalt mine have been halted, and mine safety authorities in Western Australia have initiated an investigation.

Metcash recovered from an early loss to gain 0.2 percent to $4.24 after increasing its interim dividend and exceeding profit estimates.

Splitit, a worldwide payment solution provider, increased its share price by 5.6% to 19 following the expansion of its relationship with Google to bring instalment alternatives to the Google Store in the United States, Canada, and Australia.

Elders dropped 4.6% to $9.92 after UBS downgraded it to “neutral,” citing a more cautious profit growth outlook and managerial insecurity following the exits of CEO Mark Allison and CFO Tania Foster.

Australian Clinical Labs, a pathology services company, had its stock rise 0.9% to $3.22. The Australian Information Commissioner’s Office will investigate ACL’s Medlab Pathology business after patient data was discovered on the dark web.

Energy and materials were the day’s best-performing sectors, riding a wave of optimism in China and a rebound in oil prices.

On Sunday, the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to maintain its October plan to cut output by 2 million barrels per day (bpd) from November through 2023.

The G7 and European Union are set to impose a $US60-per-barrel price ceiling on Russian seaborne oil on Monday.

Brent crude futures increased 2.2% to $US87.41 per barrel, while US West Texas Intermediate crude rose 2% to $US81.62.

Santos rose 2.7% to $7.35, while Woodside Energy rose 2% to $36.41. However, coal heavyweights Whitehaven Energy fell 2% to $9.55, while New Hope Company fell 1.6% to $5.65.

Prior to the Reserve Bank of Australia’s policy meeting, the major banks were muted. The RBA is almost set to raise interest rates for the eighth time in a row on Tuesday, with a 0.25 percentage point increase to 3.1 percent.

Interbank futures indicate an 80% possibility of a quarter-point increase and a 20% chance that the central bank would maintain rates at 2.85%.

NAB shares fell 0.4%, ANZ shares down 0.3%, Westpac shares fell 0.1%, while CBA concluded the session unchanged.

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