ASX surges in $80b midterms relief rally as oil slumps; NAB dives, NextDC soars

The Australian sharemarket staged an $80 billion relief rally on Thursday, soaring the most since April on the back of a Wall Street surge as the Democrats’ sweeping victory in the midterm elections fuelled optimism the Iran war could end soon, sending oil prices plunging.

The S&P/ASX 200 finished its Thursday session up 230.60 points, or 2.6 per cent, at 9065.19, with a 10.1 per cent rally in tech stocks and a 7.6 per cent jump in mining stocks leading the way higher, while energy stocks slumped. The relief rally came after the ASX shed 0.6 per cent on Wednesday.

“Oil easing is a big part of the good news, and that will help to decide if this rally has more legs,” said eToro APAC lead analyst Josh Gilbert. An end to the war “would take pressure off inflation, ease rate hike fears and gives risk assets the breathing room they’ve been missing for months.”

Mining stocks skyrocketed, with BHP – the world’s largest miner – jumping 6.7 per cent, Rio Tinto 7 per cent and Fortescue Metals soaring 9.2 per cent.

Gold miners took off as the price of the precious metal jumped above $US4100 ($5839) an ounce after the Democratic sweep of Congress sent the US dollar and Treasury yields lower, boosting gold’s appeal for investors. Northern Star surged 9.2 per cent, Evolution Mining soared 14.2 per cent and Newmont finished up 13 per cent.

Tech stocks jumped, with NextDC skyrocketing 50.8 per cent after revealing an aftermarket share raid on the company on behalf of Goodman Group and Digital Realty. The AI data centre operator called the raid “opportunistic” in light of its share plunge last month, when it was forced to slash profit forecasts after community outrage delayed the installation of high-voltage power lines to a data centre in Melbourne. Goodman’s 7 per cent gain led property stocks higher.

Other tech stocks also rallied, with WiseTech climbing 7.5 per cent, Xero jumping 12.6 per cent, and Life360 up 9.7 per cent. Codan, which makes electronic components for drones used in the Iran war, was an outlier with a drop of 6.2 per cent.

Consumer-related stocks posted strong gains in the bullish mood, with Wesfarmers up 3.7 per cent, JB Hi-Fi gaining 4.8 per cent and Harvey Norman rising 4.4 per cent.

Shares of department store Myer soared 13 per cent on the news its arch rival David Jones has collapsed and been surrendered to administrators and receivers. Myer is seen as the biggest winner from its planned store closures. Its landlords, shopping centre owners Scentre and Vicinity, dropped on the news, finishing down 0.4 per cent and 0.3 per cent.

Eagers Automotive plunged 13.2 per cent after a disappointing trading update.

The big four banks missed out on the rally as National Australia Bank slumped 5.4 per cent after the lender said its annual profit fell 9 per cent to $6.1 billion, with chief Andrew Irvine saying the risks of a recession have increased. Commonwealth Bank was flat, Westpac dropped 1 per cent and ANZ Bank finished down 0.6 per cent.

Energy stocks slumped as the price of oil tumbled by 8 per cent to below $US95 overnight on the US election outcome. Woodside, which announced more than 500 job cuts across its operations, shed 6 per cent, while Santos lost 5.4 per cent and Ampol shed 3.6 per cent.

Overnight, Wall Street’s S&P 500 jumped 1.6 per cent for its best day in three months as investors digested the midterms’ results. The Dow Jones Industrial Average rallied 3 per cent, and the Nasdaq composite climbed 1.4 per cent.

Wall Street may have gotten a preferred political scenario as Democrats in the US are set to take control of both the Senate and the House of Representatives. Investors generally prefer split control of Washington because it lessens the risk of transformative changes to the economy.

Looking at some of the moves that rippled through financial markets, Trump’s social-media company, Trump Media & Technology Group, was one of the bigger losers, down 24.5 per cent.

Elon Musk’s businesses also struggled. Tesla fell 3.3 per cent, and SpaceX sank 3.8 per cent. Musk, a former top Trump adviser, is among the possible targets for investigations by a Democratic-controlled Congress.

Trump has been a big backer of the AI industry, and Democratic victories could mean more regulation or restrictions.

Nvidia, the chip company at the heart of the AI frenzy, sank 3.1 per cent and was the heaviest weight on the S&P 500. CoreWeave, a company that rents out access to AI chips to customers over the cloud, dropped 9.9 per cent.

A Democratic-led Congress could push Trump to pull back on the war with Iran. That possibility hurt stocks of weapons makers, including drops of 6.9 per cent for Lockheed Martin and 4.5 per cent for Northrop Grumman. The plunge in oil prices hurt stocks of big oil companies, which had been rallying for much of the year. ExxonMobil fell 4.6 per cent, and ConocoPhillips dropped 5.2 per cent.

Indexes climbed across most of the world. Stocks leaped 2 per cent in Paris, 2.2 per cent in Shanghai and 1.8 per cent in London. Japan’s Nikkei 225 was an outlier and fell 1.4 per cent.