The Government bond market is now experiencing more volatility than the equity market, with the Australian 10-year bond yield increasing 10 basis points today, whilst the S&P/ASX 200 (ASX: XJO) gained 0.5% once again.
Dividend payments drag
Just four of the 11 key sectors were lower, led by Consumer Staples, which fell 2.3%, primarily due to Coles Group Ltd (ASX: COL) moving to ex-dividend and falling 1.7% in the session.
This is an oft-forgotten issue for investors, with most companies paying dividends in March, sending their share price down by the amount of said payment.
ASX materials, energy & commodities shares rally
ASX materials and energy stocks continued to be the primary driver of the ASX’s resilience, with the price of gas in Europe hitting an all-time record overnight.
In Australia, the biggest beneficiaries were coal miner Whitehaven Coal Ltd (ASX: WHC) and gas producer Origin Energy Ltd (ASX: ORG), which gained 10.6% and 3.6%, respectively.
China relaxes ‘zero-COVID’
The materials and commodities sectors saw a significant rally as a number of announcements out of China boosted hopes for more stimulus.
The country looks like it will abandon its Zero COVID policy, whilst at the same time the crackdown on the property sector is also set to end.
Clean energy materials including lithium and nickel were well supported; Pilbara Minerals Ltd (ASX: PLS) gained 5.3%, as was BHP Group Ltd (ASX: BHP) which added 3.6%.
OPEC+ increases output
With the oil price above USD$110 per barrel, all eyes have been on the OPEC+ cartel to loosen supply and save the world from the inflation spreading throughout the economy.
Unfortunately, the group agreed to just a 400,000 per day barrel increase in supply from April, which sent the oil price up another 9% alone.
This surge in commodity prices and shutdown of exploration has been key to the strength of the Australian economy, with the country reporting the largest trade surplus in close to a year with coal and gas offsetting the falling iron ore price.
Cimic, IAG facing legal challenges
Cimic Group Ltd (ASX: CIM) shares remained flat despite a report that the group had not fulfilled obligations to staff in the since shuttered Middle East businesses. The takeover offer from majority owner Hochtief remains the focus of markets.
Insurance Australia Group Ltd (ASX: IAG) is facing its own issues with some $300 million in claims lodged against the company, which it disputes, that relate to insurance offered to bonds issued by the now failed Greensill Financing Group.
MSCI cuts Russia
One of the world’s largest index providers, MSCI, which effectively determine where funds invested into ETFs are placed, has indicated it will remove Russia from emerging market status, stating that it was uninvestable and would no longer form part of their indices.
ASX 200 today
Looking ahead, the ASX 200 is heading towards a negative open this morning after all three US benchmarks finished in the red overnight. To find out more, check out my US stock market report.