ASX Charges More Than 2% in Early Trade

May 18, 2020 Updated: May 19, 2020

The Australian share market has sustained gains of more than 2.0 percent in morning trade, taking the lead from overnight gains on Wall Street due to rising hopes of a COVID-19 vaccine.

The S&P/ASX200 benchmark index was higher by 112.8 points, or 2.07 percent, at 5573.3 points at 1200 AEST on May 19.

The All Ordinaries index was 112.5 points, or 2.02 percent higher, at 5670.0.

Energy companies were among the best performers, with the sector index up a whopping 4.73 percent, followed by property, which was higher by 3.49 percent.

Oil Search was up by more than 9.0 percent to $3.28 after crude oil prices jumped to their highest level in two months.

Santos was higher by more than 5.0 percent to $5.15.

The materials sector was higher by 2.76 percent, and financials was higher by 2.71 percent, while the industrials sector was up 2.18 percent.

NAB economics director Tapas Strickland said there had been encouraging signs on Tuesday the Australian labour market might have passed its lowest point.

Consumer confidence rose for the seventh consecutive week, according to ANZ research, and the total wages bill rose in the past two weeks, based on Australian Bureau of Statistics data.

Strickland said the data showed why markets had been rallying of late.

However, he believed the rally would be sustained only if the Chinese government on Friday unveiled an ambitious stimulus program.

This would boost Australian mining.

Shares in building materials manufacturer James Hardie rose more than 9.0 percent to $23.52 after it reported full-year profit rose a steady 6.0 percent to $US241.5 million.

Betting and gaming giant Tabcorp had a more than 1.0 percent rise to $3.22.

It said it would not pay a full-year dividend to shareholders amid the uncertainty of the COVID-19 pandemic.

Miners enjoyed gains, with BHP rising more than 4.0 percent to $34.62, Rio up by more than 3.0 percent to $93.77 and Fortescue gaining more than 3.0 percent to $13.79.

South32 climbed more than 4.0 percent to $1.97 and BlueScope edged up more than 3.0 per cent to $10.40.

Westpac was best of the big four banks, higher by more than 4.0 percent to $15.57.

Qantas was another company to gain from the market optimism, climbing more than 5.0 per cent to $3.55.

The goldminers were among the few group to lose value as investors opted for riskier stocks.

Northern Star had one of the biggest losses, down more than 3.0 percent to $14.10.

The rush to buy local stocks was expected after the S&P 500 in the US climbed 3.2 percent overnight.

Investors responded to US biotech Moderna’s encouraging results from early tests of an experimental vaccine for COVID-19.

Investors also took heart from Federal Reserve chairman Jerome Powell’s comments at the weekend, when he expressed optimism the US economy could begin to recover from the pandemic in the second half of the year.

The Australian dollar was buying 65.26 US cents at 1200 AEST, down from 64.32 US cents at the close of trade on Monday.

By Steven Deare in Sydney