The S&P/ASX 200 (ASX: XJO) started the week on a positive note, increasing 0.9% on Monday after a strong global lead over the weekend.
The biggest contributor was an unexpected announcement from the People’s Bank of China around the loosening of monetary policy. The central bank reduced the amount of capital required to be held by each of its member banks in an effort to once again stimulate lending.
The move was seen as a positive for the mining sector, with BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) adding 3.2% and 3.3% on hopes this will result in more infrastructure spending and construction.
The bearish among us on the other hand suggest this could be a leading indicator of a weaker outlook for the global economy as China’s first in, first out, V-shaped economic recovery appears to be slowing.
Within the market, the real estate sector also benefitted, up 1.3%, with the likes of Vicinity Centres (ASX: VCX) and Charter Hall Group (ASX: CHC) up 1% and 3.1% as activity picks up in commercial property markets despite the pandemic.
Wesfarmers sends API share price flying
Australian Pharmaceutical Industries Ltd (ASX: API), the owner of the Priceline chain of pharmacies, jumped 19.7% on Monday after Wesfarmers Ltd (ASX: WES) lobbed a bid to purchase the company.
The offer is $680 million at a price of $1.38 per share for the entire group, which both produces and distributes a diverse range of pharmacy products. API shares quickly closed the gap, finishing at $1.37.
API’s largest shareholder Washington H Soul Pattinson and Co Ltd (ASX: SOL) has backed the purchase, which shows Australia’s leading retail and distribution network’s willingness to double down when it sees opportunity.
A2 Milk announces restructure
On the other side of the spectrum, A2 Milk Company Ltd (ASX: A2M) continued to weaken despite announcing a ‘restructure’ of its operations following a recent chief executive departure.
The group will be split into China domestic, Australia domestic and international export business units in an effort to allow greater management focus on each division.
NRW simplifies
Mining service provider NRW Holdings Holdings (ASX: NWH) jumped 12.0% after announcing the sale of a number of leased mining assets to one of its business partners, with the deal set to reduce debt and improve capital returns.
ASX 200 today
The ASX 200 is set to open higher on Tuesday following a positive lead from US markets overnight. To find out more, check out Rask Media’s US stock market report.