ASX rallies 0.9%, led by miners, tech and property stocks

The news: The Australian sharemarket has climbed higher after the Christmas break, tracking with steady gains on Wall Street, a rising iron ore price and continued hopes of US rate cuts in 2024. The benchmark ASX200 gained 0.8% to finish at 7,561.20, with help from minerals stocks, which gained on higher commodity prices as China cut duties on raw critical minerals imports.

The numbers: The Australian dollar rose to its highest level since 20 July and is trading at 68.3 US cents as confidence grows in US Federal Reserve rate cuts. The US dollar strength index is at its lowest level since late July, and down more than 5.4% from its 2023 peak in October.

Locally, real estate (+1.6%), IT (+1.3%) and materials (1.1%) stocks all made solid gains. Critical minerals miners were among the best performers, with European lithium exporter Vulcan gaining 10.1%, recent takeover target Liontown Resources up 6.3% and recently-merged giant Arcadium Lithium finishing the second day of its dual listing 5.9% higher. Core Lithium was among the worst performers, losing 6.7% and slashing most of the gains of its December rally.

The context: Oil prices have surged 2% in recent days after renewed attacks on oil tankers in the Red Sea by Iran-backed Houthi rebels. Reuters reports there are growing concerns of a broader conflict in the Middle East after the US launched strikes on Iraqi military positions in retaliation from a drone attack by Iran-aligned militants. It is a quieter week for global macroeconomic data, with just a handful of US, Japanese and UK figures set to print before the weekend.