ASX powers into record territory on rare earths fever

Mining stocks helped the Australian sharemarket set another high on Tuesday after Prime Minister Anthony Albanese and US President Donald Trump signed a landmark critical minerals deal that will pave the way for joint rare earths projects between the two countries.

The S&P/ASX 200 finished 62.8 points or 0.7 per cent higher to 9,094.7, building on its 0.4 per cent gain from Monday. The Australian dollar traded slightly lower on Tuesday afternoon at US65.97¢ about 4.45pm (AEDT).

Australia’s rare earths producers have had a massive run this year, which accelerated after China earlier this month announced tighter global export controls of the minerals, which are crucial for industries covering semiconductors, defence technology and renewable energy.

Addressing reporters with Trump at the White House, Albanese said Australia and the United States would each contribute $US1 billion ($1.54 billion) over the next six months for rare earths projects that are immediately available, and the deal would unlock an $US8.5 billion pipeline of projects.

Australia will start with $200 million in concessional finance for the Alcoa-Sojitz Gallium Recovery Project in Wagerup, Western Australia, and $100 million for the Arafura Nolans Project in the Northern Territory.

“In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” Trump said.

Alcoa’s shares finished 7.5 per cent stronger after the announcement, and Alcoa Corporation rose 7.5 per cent. Lynas, the nation’s biggest rare earths miner and the only producer of so-called heavy rare earths outside China, jumped 4 per cent in early trade before profit-taking set in, sending it down 7.6 per cent. Its share price has more than tripled already this year. Iluka gained 0.1 per cent.

The best performer of the day was Hub24, which gained 10.6 per cent to hit a record $118.59, followed by Mesoblast (up 9.4 per cent).

“After seven weeks of consolidation during September and the first half of October, the ASX 200 has exploded to life in recent weeks,” said IG market analyst Tony Sycamore.

But if the ASX were to fall below 8990, that would indicate the recent rally had failed, he added.

Super Retail Group gained 1.5 per cent on news that sacked CEO Anthony Heraghty had been replaced by one of his former direct reports, Paul Bradshaw, the CEO of boating, camping and fishing retailer BCF.

Gold miners extended their recent rally, with Northern Star Resources up 2.9 per cent, Evolution Mining jumping 4.4 per cent and Newmont up 2.7 per cent.

Gold climbed 2.5 per cent overnight to trade near its all-time high as traders took advantage of a sell-off on Friday to buy more bullion. There was nothing but buyers in the gold market, said Ole Hansen, commodities strategist at Saxo Bank. The retreat in prices “has already attracted fresh demand today, highlighting the strength of underlying demand still lurking below”.

TD Securities’ Dan Ghali ascribed the price rally to “extreme FOMO”, the fear of missing out among investors, adding that gold’s ascent this time around was “overwhelmingly driven by the West”.

The iron ore heavyweights were also higher, with the world’s largest miner, BHP, rising 2.3 per cent after confirming its full-year production forecast for the steel-making metal despite a slight production dip in the September quarter. Fortescue Metals added 1.3 per cent and Rio Tinto lifted 0.9 per cent.

The big four banks swung into the green as they headed into lunchtime trading, posting more gains after their rally on Monday, which saw the Commonwealth Bank – the nation’s biggest stock – lift 0.5 per cent. Westpac finished 0.2 per cent lower, as did NAB (down 0.3 per cent). ANZ Bank rose 0.7 per cent.

After spending most of the day in the red, Woolworths finished flat and Coles closed 0.4 per cent lower.

On Wall Street, technology shares provided much of the upside muscle for the market at the start of the week, as generally upbeat quarterly earnings results helped revive investor risk appetite after last week’s roller-coaster ride.

The S&P 500 rose 1.1 per cent and got back within 0.2 per cent of its all-time high, set earlier this month. The Dow Jones Industrial Average also gained 1.1 per cent and the Nasdaq composite jumped 1.4 per cent.

Apple stock climbed 3.9 per cent to a high after Loop Capital upgraded the stock to “buy” from “hold”, becoming the latest firm to cite positive iPhone demand trends. Meta, Netflix and Google owner Alphabet gained between 1.3 per cent and 3.3 per cent. Micron shares rose 2.2 per cent and hit a record after Barclays raised its price target on the stock.

Amazon’s shares held up despite a widespread outage for its cloud computing service that caused disruption for internet users around the world overnight, with issues continuing to affect its operations early this morning. The stock rose 1.6 per cent.

Among other stock moves, Boeing advanced 1.8 per cent after the plane manufacturer won approval from the US Federal Aviation Administration to raise 737-MAX production to 42 planes per month.

WeightWatchers surged 9.3 per cent following the company’s announcement that it would partner with Amazon for weight-loss drug delivery.

With the earnings season well under way, about 85 per cent of the companies in the S&P 500 reporting results have beaten profit expectations, which helped fuel the rebound in equities.

Cleveland-Cliffs helped lead the way with a jump of 19 per cent after the steel company’s chief executive, Lourenco Goncalves, said it would provide details soon about a potential deal with a major global steel producer that could mean bigger profits. He also said Cleveland-Cliffs had potentially found rare earths at sites in Michigan and Minnesota.

Another source of worry for Wall Street, the banking industry, also appears to be on the up. Stocks of smaller and midsized banks climbed overnight, recovering some of their losses after a couple raised alarm bells last week by warning about potentially bad loans they had made.

The disclosures had raised questions about whether the growing list of problems is just a collection of one-offs or a signal of something larger threatening the entire industry.

This will be a heavier week for corporate earnings reports in the US generally. Big names delivering their latest results will include Coca-Cola tonight, Tesla on Wednesday [early Thursday AEDT] and Procter & Gamble on Friday.

The pressure is on companies to show that their profits are growing because they need to justify the big gains their stock prices have made. The S&P 500 is still near its all-time high, which was set earlier this month following a torrid 35 per cent run from a low in April.

with AP, Reuters and Bloomberg

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