The ASX surged higher thanks to strong gains by bank stocks, particularly CBA, while Nick Scali rallied on news it was acquiring a sofa business.
The Australian sharemarket closed firmly higher after banks rebounded strongly while gains by energy, travel and consumer discretionary stocks also helped.
The benchmark S&P/ASX200 index finished 1.29 per cent stronger at 7278.5 while the All Ordinaries Index gained 1.2 per cent to 7576.8.
CommSec analyst Tom Piotrowski said it came after the local bourse fell 2.1 per cent last week on the back of a “litany of statistics that were unflattering” but the futures market had pointed to a higher start on Monday, with the big question being whether investors would take advantage of cheaper share prices.
Wall Street also had a negative week but managed to close higher on Friday, when US economic and political news was better than expected, combined with investors pouncing on bargain stocks, Mr Piotrowski said.
OMG chief executive Ivan Tchourilov said the market took off, paring some of last week’s losses and with several states enjoying a public holiday.
“Travel stocks are once again in the green,” Mr Tchourilov said.
“The end of lockdowns in NSW is fast approaching, fuelling a surge in travel stock valuations.
“Travel stocks also saw a big boost in the US on Friday night.”
A top performer was Helloworld Travel, which rocketed 14.82 per cent to $3.10.
Flight Centre jumped 9.6 per cent to $23.95, Regional Express leapt 6.92 per cent to $1.70, Webjet added 2.94 per cent to $6.66, Corporate Travel Management rose 3.33 per cent to $25.17 and Qantas put on 1.75 per cent to $5.81 in the wake of Prime Minister Scott Morrison last week announcing Australia’s plan for the resumption of international travel.
The big four banks were all substantially higher, with ANZ appreciating 2.15 per cent to $28.03, National Australia Bank firming 1.94 per cent to $27.80, Westpac rising 2.13 per cent to $25.95 and Commonwealth Bank soaring 5.08 per cent to $105.16 after announcing it had completed its $6bn off-market share buyback.
Mr Tchourilov said CBA was his company’s most sold stock after it gained ground, with the buyback consolidating shareholders’ stake in bank by about 3.8 per cent.
“The buyback of public equity also increases the bank’s capital against its riskier assets, reducing risk in times of financial distress,” he said.
“The remaining big three banks, which have each already announced they are either proceeding with their own buyback or at least considering it, increased more than a percentage point each.”
Furniture retailer Nick Scali leapt 10.38 per cent to $12.12 after announcing it would acquire mid-market made-to-order sofa retailer Plush Think-Sofas for $103m, saying the purchase would expand its store network in Australia and New Zealand to 108.
Nick Scali also said there was the opportunity to open new Plush stores in currently under-represented catchment areas.
“The company believes there is potential for Plush to achieve a long-term store network target of 90-100 stores in addition to Nick Scali’s previously communicated long term network target of at least 85 stores,” Nick Scali said.
Mosaic Brands, which owns fashion chains including Rockmans and Noni B, rallied 6.9 per cent to 62 cents while candles retailer Dusk shot up 4.84 per cent to $3.25.
In the energy sector, Origin put on 3.36 per cent to $4.92, Woodside gained 1.56 per cent to $24.12, Santos lifted 1.72 per cent to $7.08, Oil Search rose 1.4 per cent to $4.34 and Beach Energy improved 0.35 per cent to $1.42.
Boral lifted 4.19 per cent to $6.22 after announcing it had completed the sale of its North American building products business to Westlake Chemical Corporation for $US2.15bn ($A2.96bn) and the divestment of its Australian timber business to the Pentarch Group for $A64.5m.
Rio Tinto inched 0.23 per cent higher to $97.50 and BHP firmed 0.24 per cent to $36.94 but Fortescue slid 1.17 per cent to $14.40.
Operations have begun progressively resuming at Fortescue’s Solomon Hub in Western Australia’s Pilbara region after being suspended following the death of employee David Armstrong in a ground collapse accident.
Fortescue advised on Friday its guidance for shipments, production costs and capital expenditure for 2021-22 were unaffected.
MetalsTech surged 6.06 per cent to 70 cents after reporting a bonanza gold hit of 594 grams per tonne at its flagship Sturec mine in Slovakia.
Yancoal rocketed 18 per cent to $3.54.
In the wake of September’s post-reporting season sell-off, CommSec chief economist Craig James noted October had a reputation as being a “bogey month” for sharemarkets, with data showing it had been a volatile period over decades.
“Many analysts believe the so-called ‘October effect’ is more psychological rather than reflecting actual real-world influences,” Mr James said.
“At the end of the day, it’s important to note that past performance isn’t a reliable guide to future returns.
“Investors always need to be alert and not alarmed, and be guided by economic and company ‘fundamentals’.”
The Aussie dollar was fetching 72.68 US cents, 53.62 British pence and 62.64 Euro cents in afternoon trade.