A first week of gains in the past five on the ASX has investors feeling better, although there’s wariness of China’s highly leveraged economy.
An ASX rally on Friday spurred by a truce in the US debt-ceiling stand-off ensured a good day and better week for traders.
Pepperstone chief market strategist Chris Weston said there had been a short-term reprieve from worries about the debt ceiling and rising bond yields.
US senators temporarily raised the debt limit to avoid a default later this month.
Yet Mr Weston was looking elsewhere for threats to market momentum.
“We need to continue to watch China,” he said.
“We still don’t know what’s happening with Evergrande. We don’t know whether bondholders are being paid.”
The cash-strapped property giant is due to pay nearly $US150 million in interest payments next week. It has more than $US300 billion in debt.
Mr Weston said corporate debt in China was at its highest level in 10 years, which posed a risk.
“The market has a strong belief that what happens in China will stay in China,” he said.
“But if you see the credit-worthiness of these investments deteriorate, will it spill over into equities.”
Meanwhile, US job figures for September will dominate investor attention at the end of the week.
The jobs figures, and inflation numbers next week, will guide the US Federal Reserve as to when to ease economic stimulus.
Australians can expect a rebound in their economy as the lockdown states gradually reopen from coronavirus lockdown.
Yet a Reserve Bank review of banking says the longer-term outlook is uncertain given the risk of serious COVID-19 outbreaks here and abroad.
The benchmark S&P/ASX200 index closed higher by 63.4 points, or 0.87 per cent, to 7320.1.
The All Ordinaries closed up 66.1 points, or 0.88 per cent, to 7617.3.
The market improved 1.87 per cent over the past five days.
Iron ore miners thrived after the price of the steel-making commodity nudged higher.
Rio Tinto climbed four per cent. BHP gained three per cent. Fortescue was up 2.44 per cent.
Woolworths settled a wage theft claim worth more than $300 million and pledged to pay more underpaid workers.
About 6,000 current and former workers began a class action in 2019 after store managers complained they earned less than their staff.
Woolworths has since paid $370 million for underpayments from 2013 to 2019.
The company will next pay about $50 million to 20,000 current and former workers underpaid between 2010 and 2013.
Shares were up 0.63 per cent to $39.95.
EML Payments shares slumped after Ireland’s central bank detailed earlier anti-money laundering concerns about EML’s Irish subsidiary.
The bank has foreshadowed orders that could substantially affect EML’s Prepaid Financial Services business across Europe.
The bank also proposed changes that could negatively affect the Irish subsidiary.
Shares were down almost 15 per cent to $3.16.
In banking, the big four were mostly higher. NAB was best and rose 1.39 per cent.
Energy Resources of Australia revealed higher costs in repairing land used for the former Ranger uranium mine in the Northern Territory.
The company said it cannot yet estimate the cost overruns.
Shares closed even at 37 cents.
Supermarket group Metcash will have a new chief executive after Jeff Adams retires next year.
The boss of South Africa-based Massmart Wholesale, Doug Jones, will join Metcash in February.
Shares were down 0.74 per cent to $4.00.
The Australian dollar was buying 72.98 US cents at 1720 AEDT, higher from 72.80 US cents at Thursday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed higher by 63.4 points, or 0.87 per cent, to 7320.1 on Friday.
* The All Ordinaries closed up 66.1 points, or 0.88 per cent, to 7617.3.
* At 1720 AEDT, the SPI200 futures index was even at 7277 points.
CURRENCY SNAPSHOT
One Australian dollar buys:
* 72.98 US cents, from 72.80 cents on Thursday
* 81.66 Japanese yen, from 81.20 yen
* 63.18 Euro cents, from 63.04 cents
* 53.66 British pence, from 53.61 pence
* 105.35 NZ cents, from 105.25 cents.
