War in Ukraine and the associated commodity price surge has again worked in the favor of Australia’s energy and mining titans, with a rocketing resources sector helping the local sharemarket climb for a fifth straight session on Thursday.
Further gains for oil and iron ore and near-record coal prices fueled a rolling run for the likes of BHP, Rio Tinto, Fortescue Metals, and Woodside Petroleum, with the material-heavy ASX 200 adding another 34.7 points, or 0.5 per cent, to finish the day at 7151.4.
The broader All Ordinaries closed the session 0.6 per cent ahead at 7446.8, while the Aussie dollar rose to 73.05 US cents at the local close.
The benchmark index has now surfed soaring commodity prices back to within a whisker of where investors were before the Russian invasion of Ukraine last week, a geopolitical disaster that initially sent investors running for the hills.
However, sanctions against President Vladimir Putin’s regime and the implied threat to global oil and coal output have continued to push energy prices higher, with bulk and base metals following suit, making mining and oil prospectors an increasingly attractive investment.
Oil topped $US114 in overnight trade and IG Markets analyst Kyle Rodda expected markets could top more than decade-high prices.
“It could be argued the ASX is benefiting from the conflict in Ukraine, given the surge in commodity prices, especially in energy markets,” Mr Rodda said.
“Throw into this a staunch commitment from OPEC+ to its production plans and a bid drawdown in US inventories, and Brent looks like it could test levels not seen since 2011.”
Subsequently, Woodside Petroleum added another 3 per cent on Thursday to hit a new post-pandemic high of $31.34 and bring its gains since the turn of the year to 40 per cent.
Elsewhere, gas giant Santos rose 1.7 per cent to $7.84, Beach Energy lifted 4.7 per cent to $1.68, and Origin Energy was up 3.6 per cent to $5.84.
Energy investment house Washington H Soul Patts was another major winner, up 3.4 per cent to $26.55.
An iron ore jump helped BHP gain another 3.6 per cent to close near six-month highs at $50.06, while Rio Tinto climbed 3.7 per cent to finish at $127.85, also its best since the middle of 2021.
Elsewhere, Twiggy Forrest’s Fortescue Metals added 4.2 per cent to close at $19.73, with Mineral Resources jumping 43.4 per cent to $47.47 and Champion iron up 3.4 per cent to $6.92.
However, City Index market analyst Tony Sycamore said coal stocks were the star of the show, with Russian sanctions kicking off “extreme panic” in the coal futures market.
Red-hot coal prices, which have tripled in the last two months, jumped 42 per cent overnight and put a rocket under the likes of miner Whitehaven, which rose 10.6 per cent to $3.96, its best price since 2019.
Yancoal gained 11 per cent to $4.75 and New Hope Coal was up 4.3 per cent to $2.93.
The wider investment appetite was also helped by a risk rally on Wall Street and in Europe, sparked by market-pleasing testimony from US Fed chair Jerome Powell.
OANDA Asia Pacific analyst Jeffrey Halley noted Mr Powell had indicated he would not be deterred from hiking rates at this month’s policy meeting despite uncertainty surrounding the Ukraine situation, although he appeared to take a more severe hike of 50bps off the table.
Gold lost some of its recent lustre in the ensuing rush to risk, with precious metal miners Newcrest, Northern Star and Evolution all declining.
It was also a weak session for healthcare firms – the sector weighed down by a 1.3 per cent drop for blood giant CSL to $257.50 – while NAB was the only one of the big four banks to gain ground, finishing 0.4 per cent higher at $29.11
A number of ex-dividend stocks closed lower, including supermarkets Woolworths and Coles, Nine Entertainment, market operator ASX Ltd, health insurer nib, and funeral firm InvoCare.