The Australian share market has risen sharply in early trade, after stocks on Wall Street made a comeback on Friday, and the $2.5 trillion US stimulus bill moved closer to becoming law.
By 12pm AEDT, the ASX 200 had gained 1.8 per cent to 6,830 points, putting the benchmark index on track for one of its best percentage rises so far in 2021.
The Australian dollar was higher, buying around 77.1 US cents.
Around the region, Tokyo’s Nikkei was also on the rise, up 0.9 per cent.
The optimism followed the US Senate passing President Joe Biden’s $US1.9 trillion stimulus bill over the weekend, bringing it a step closer to becoming law.
“Views on what it all means for the economy, inflation and with that markets, should dominate proceedings this week,” NAB strategist Ray Attrill said.
All sectors of the local market were on the rise, led by education services and mining stocks.
The best performing stocks of the session so far were Silver Lake Resources (+5.3pc), ARB Corp (+6.9pc) Treasury Wine Estates (+8.3pc).
On the flipside, the worst performers were Smartgroup (-5.1pc), Zip Co (-3.1pc) and Santos (-1.8pc).
Santos shares fell after the company’s largest shareholder sold about a third of its stake in the oil and gas company.
Chinese energy firm ENN sold off around 107 million shares in Santos, a 5.1 per cent holding, but remains its largest single shareholder with a near 10 per cent stake.
Technology stocks were on track to snap a four-session losing streak, with the sector up 1.4 per cent — shares in Appen (+4.6pc) rose strongly.
Major miners inlcuding Fortescue (+2.8pc), BHP (+3.3pc) and Rio Tinto (+3.9pc) were making gains.
After last week’s figures showed the Australian economy recovering faster than expected in the final quarter of last year, Westpac economists upgraded their forecasts for the current quarter.
Westpac chief economist Bill Evans has now forecast the economy to expand by 1.6 per cent over the first three months of the year.
“The level of [gross domestic product] GDP in the March quarter is expected to exceed that in the December quarter of 2019 by 0.4 per cent, returning activity to pre-pandemic levels one quarter earlier than we had previously expected,” he said.
Westpac economists now expect GDP growth of 4.5 per cent over 2021, compared to their previous forecast of 4 per cent, followed by 3 per cent expansion in 2022.
Meantime, RBC Capital Markets has increased its annual GDP growth forecast to 4.7 per cent, given that the economy ended last year stronger than it had forecast.
“While the consumption recovery has been underway largely since mid-2020, we expect business investment and [residential] investment to contribute more to activity this year compared to 2020,” RBC chief economist Su-Lin Ong said.
On Friday, the major US indices staged an afternoon comeback, with the S&P 500 ending 2 per cent higher.
The US non-farm payrolls report revealed a stronger-than-expected picture of the country’s jobs market, with 379,000 jobs added in February and January’s figures revised upwards.
Meanwhile, the US unemployment rate edged lower, to 6.2 per cent.
“The data imply that the labour market is responding to the December fiscal stimulus and that the lull in hiring over the turn of the year is over,” ANZ economists wrote in a note.
However, US Treasury Secretary Janet Yellen tempered the optimism, pointing out that the true unemployment rate was around 10 per cent, as four million Americans have dropped out of the labour force during the pandemic.