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Miners help ASX start 2021 higher

Steven Deare
·3-min read

Investors have enjoyed a gain of about 1.5 per cent from the first session of 2021 on the Australian share market, after miners and particularly Fortescue Metals powered indices higher.

The S&P/ASX200 benchmark index closed higher by 97.1 points, or 1.47 per cent, to 6684.2 on Monday.

The All Ordinaries closed higher by 103.1 points, or 1.5 per cent, at 6953.7.

The positive start to the year comes after US markets closed higher on Thursday in the wake of US Congress approving a $US892 billion relief package for an economy battered by the coronavirus pandemic.

Australian health authorities reported just three locally-acquired coronavirus infections in the 24 hours to 2000 AEDT on Sunday. All were in Victoria.

NSW authorities said they found two cases after the reporting period.

All ASX industry sectors were higher and best was materials, which gained 2.35 per cent.

Fortescue Metals was a driving force and closed 5.85 per cent higher to a record price of $24.80.

ThinkMarkets analyst Carl Capolingua said iron ore prices had been lower earlier in the day, but turned higher during the Aussie session.

He said Asian markets including Shanghai's had traded higher since Christmas Day.

China is the biggest customer for iron ore exporters like Fortescue.

"I wouldn't be surprised if some of this materials gain (on the ASX) is a response to the strength of the Chinese stock market," Mr Capolingua said.

Other iron ore miners had more modest gains. BHP rose 1.48 per cent to $43.06 while Rio Tinto increased by 1.34 per cent to $115.36.

The materials sector's rise was also helped by the gold price, which was higher by more than 1.2 per cent to $US1922.

A surge in COVID-19 cases and prospects of tougher coronavirus control measures lured investors to the safe-haven metal.

Newly-reported US infections hit a new daily record on Saturday, at 299,087. The nation's infectious diseases expert, Dr Anthony Fauci, has warned of tougher times ahead.

Meanwhile in the UK, Prime Minister Boris Johnson has said tougher lockdown restrictions were probably likely as infections keep mounting.

Gold miners on the ASX reaped the benefit. Evolution rose 5.61 per cent to $5.61. Newcrest Mining jumped 4.77 per cent to $27.01 and Northern Star increased 4.73 per cent to $13.29.

There were gains of more than one per cent for energy, consumer discretionaries and staples, financials, telecommunications, utilities and property.

One of the biggest jumps came from Chalice Mining, which gained 10.26 per cent to $4.30.

The West Australian government has approved the company's application to look for copper, nickel and platinum in the Julimar State Forest, northeast of Perth.

Chalice said this would be the first time the forest had been explored for these commodities.

In banking, the Commonwealth was best of the big names. It rose two per cent to $83.75.

The rest of the big four, along with Bendigo and Macquarie, all gained more than one per cent.

Looking ahead, the Organisation of the Petroleum Exporting Countries (OPEC) is soon due to discuss output levels for February.

There are fears for first-half demand given the prospect of coronavirus lockdowns in Western countries.

The Aussie dollar was buying 77.09 US cents at 1721 AEDT, higher from 76.95 US cents at the close of the previous session on Thursday.

ON THE ASX

* The S&P/ASX200 benchmark index closed higher by 97.1 points, or 1.47 per cent, to 6684.2 on Monday.

* The All Ordinaries closed higher by 103.1 points, or 1.5 per cent, at 6953.7.

* At 1721 AEDT, the SPI200 futures was higher by one point, or 0.02 per cent, to 6614 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 77.09 US cents, from 76.95 cents on Thursday

* 79.43 Japanese yen, from 79.43 yen

* 62.96 Euro cents, from 62.67 cents

* 56.37 British pence, from 56.55 pence

* 107.11 NZ cents, from 106.63 cents.