ASX soars amid optimism

Analyst lauds market’s ‘incredible performance’

THE Australian sharemarket has rallied to its highest level since March 6, with gains across nearly every sector on a wave of positivity about Australia’s economic prospects.

The S&P/ASX200 benchmark index finished yesterday close to the highs of the day, up 106.5 points, or 1.83 per cent, at 5941.6 points, while the All Ordinaries index gained 104.8 points, or 1.76 per cent, at 6064.9.

“What an incredible performance, it’s just phenomenal,” said CMC Markets chief market strategist Michael McCarthy.

“I can’t reconcile this with the information from companies and the macro performance we’re seeing, but the market is always right.”

The gains were being driven by retail investors, Mr McCarthy said.

“Institutional and professional investors were caught out by the rally and some of them have been forced to scramble,” he said.

With the price action this strong, further gains were likely in the next several days, Mr McCarthy said.

The ASX200 is now up 35 per cent from its March 23 nadir of 4402.5, and down just 17.4 per cent from its all-time peak of 7197.2 set on February 20. Every sector was up except health care, which edged 0.07 per cent lower as CSL declined 0.4 per cent to $283.55.

Mr McCarthy said the sector’s lack of support pointed to the idea that investors are looking for beaten-up stocks and sectors. Goldminers also suffered during the strong riskon session, with the five worstperforming ASX200 components all extractors of the precious yellow metal.

Silver Lake, Regis, Gold Road Resources, Saracen and Evolution dropped by between 8.4 per cent and 5.8 per cent, while Northern Star fell 5.5 per cent and Newcrest dipped by 2.3 per cent.

Diversified miners performed better, with South32 gaining 6.9 per cent to $2.16, Rio Tinto adding 0.5 per cent to $97.42 and BHP advancing 2.6 per cent to $36.34.

Zip Co soared another 22.1 per cent to an all-time high of $6.35, on top of Tuesday’s 38.7 per cent gains following the buy now, pay later company’s acquisition of US-based QuadPay.

“That is just eye-watering,” Mr McCarthy said, noting the gains gave Zip a market capitalisation of $2.5 billion.

Rival Afterpay added 5.5 per cent to an all-time high of $52.26 – up more than six-fold from its March 23 nadir of $8.01 – while others in the buy now, pay later space also shone.

Flexigroup added 6.0 per cent, Sezzle rose 7.3 per cent, Splitit gained 4.7 per cent and Openpay soared 51.8 per cent to an all-time high of $3.02 – up nine-fold from its March 23 low of 32 cents.

“I’m going to call this a bubble,” Mr McCarthy said yesterday.

“That is bubble behaviour.”