ASX rises sharply, tracking strong gains in global markets as commodity prices ease worries about inflation

Australian shares have started the day higher, as investors look to shrug off worries about renewed rate hikes on the back of soaring inflation while improved underlying prices are expected to aid domestic commodity stocks.

The ASX 200 was up 80 points or 1.2 per cent to 6,660 at 10:20am AEST.

At the same time, the Australian dollar was down at 69.37 US cents.

Immuno-oncology company Imugene was up 15.2 per cent to $0.19, marketing company Metcash gained 7.8 per cent to $4.46, while gold ore miner Evolution plunged by 15 per cent to $2.88 and Zip dropped 5.1 per cent to $0.51.

Stocks on global markets rallied on Friday and registered strong gains for the week as a recent slide in commodity prices eased worries about inflation and the rate hike outlook.

The S&P 500 climbed 3.1 per cent in its biggest daily percentage gain since May 2020, and the MSCI global index rose 4.8 per cent for the week, snapping three straight weeks of declines.

US Treasury yields edged up from two-week lows.

Investors have been worried that aggressive interest rate hikes by the Federal Reserve and other major central banks to combat inflation could cause a recession, which would reduce demand for commodities and other items.

“The [stock] market came into this week oversold, so it was time for a bounce,” said Quincy Krosby, chief equity strategist at LPL Financial in Charlotte, North Carolina.

“We’ve seen oil prices come down along with other commodity prices,” she said, adding that the market’s move was reflecting “expectations of at least a marked slowdown if not an out-and-out recession.”

Also, the University of Michigan consumer sentiment survey’s reading on five-year inflation expectations was positive for stocks, Dr Krosby said. It eased to 3.1 from the preliminary 3.3 per cent estimate in mid-June.

The benchmark S&P 500 last week confirmed a bear market.

The Dow Jones Industrial Average rose 823.32 points, or 2.68 per cent, to 31,500.68, the S&P 500 gained 116.01 points, or 3.06 per cent, to 3,911.74 and the Nasdaq Composite added 375.43 points, or 3.34 per cent, to 11,607.62.

For the week, the S&P 500 rose 6.4 per cent, the Dow added 5.4 per cent and the Nasdaq gained 7.5 per cent.

The pan-European STOXX 600 index rose 2.62 per cent and MSCI’s gauge of stocks across the globe gained 2.63 per cent.

Oil prices were higher on Friday but notched their second weekly decline.

By 10:28am AEST, Brent crude oil was down, trading at $US111.32 a barrel.

ABC/Reuters