The gains in BHP, Anglo and Rio also paced an advance in the pan-European STOXX 600, which rose 1.3pc to its highest since late February 2020.

The miners lifted in sync with copper, which jumped to its highest since 2012. Three-month copper on the London Metal Exchange was up 0.8pc at $US8395 a tonne at 1700 GMT, its highest since September 2012.

“There’s a very, very strong focus on reflation and there’s also a feeling that Chinese demand is not going to be as weak as in previous new years because travel restrictions are keeping more production capacity open,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Hansen said the technical picture for copper was bullish because of an uptrend channel that has persisted since last March.

“The upper bound of that channel is $US8700, so there’s another $US300 and that’s going to be the next target for copper,” he said.

ANZ has set a 12-month target price of $US9000 a tonne for the metal often used as a gauge of global economic health.

“With environmental policies accelerating the use of copper, we see the market remaining tight this year,” said Daniel Hynes, senior commodity strategist at ANZ.

Brent oil hit a session peak of $US63.76, its highest since January 22 last year. Russian Deputy Prime Minister Alexander Novak said the global oil market is on a recovery path and prices this year could average $US45-$US60 a barrel.

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Bitcoin was trading near $US48,600; it trade in a rough $US3000 range the last 24 hours.

Oanda’s Jeffrey Halley said bitcoin investors will need to accept continually volatility: “Bitcoin will probably go up above $US50,000 this week, or perhaps in the next 30 minutes.”

Today’s agenda

Local: Payroll jobs and wages week end January 30

Overseas data: Euro zone fourth quarter GDP, ZEW expectations February; New York Empire manufacturing February

Market highlights

ASX futures up 27 points or 0.4% to 6832 near 4.45am AEDT

  • AUD +0.3% to 77.87 US cents
  • Bitcoin at $US48,630 near 4.45am AEDT
  • Wall St closed for Presidents Day
  • In Europe: Stoxx 50 +1% FTSE +2.5% CAC +1.5% DAX +0.4%
  • Spot gold -0.3% to $US1818.01/oz at 12.46pm New York time
  • Brent crude +1.3% to $US63.26 a barrel
  • US oil +1.2% to $US60.18 a barrel
  • Iron ore flat at $US166.88 a tonne
  • 2-year yield: US 0.11% Australia 0.09%
  • 5-year yield: US 0.49% Australia 0.57%
  • 10-year yield: US 1.21% Australia 1.32% Germany -0.38%
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From today’s Financial Review

Why this bull market could leave the dotcom bubble in its dust: The new breed of investment stars – led by ARK Investment’s Cathie Wood – are delivering returns of which the dotcom heroes could only dream.

Call for ASIC to probe Crown directors’ failure to act: Legal experts say the corporate regulator should investigate if Crown directors breached their duties and whether Helen Coonan is a suitable interim chief executive.

United States

The AFR View: America must move on from the Trump show: The hard political truth here is that for America to truly move on from Donald Trump, Joe Biden will need to at least match his predecessor on China and the economy.

‘It’s a fricken civil war’: Republican Party tears itself apart: Donald Trump’s Senate acquittal has triggered a wave of recrimination and score-settling inside the Republican Party.

Data ahead later this week: January retail sales and industrial production; January housing starts, building permits, existing home sales; Markit manufacturing and services PMIs for February.

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TD Securities on retail sales (Thursday AEDT): “Retail sales probably rebounded in January after falling by 2.1pc in the previous three months. (The control series fell 3.3pc.) The strength can be explained in part by an exaggerated boost from seasonal factors after less seasonal strength than usual at year-end, but a fresh round of individuals’ stimulus payments and an easing of COVID-19 restrictions likely contributed as well.”

Europe

European shares ended at a near one-year high as major resource stocks benefited from expectations of a swift economic recovery, while Vivendi led gains on its planned capital distribution from Universal Music.

Banks and energy stocks also climbed as a so-called “recovery trade” sparked demand for sectors that had underperformed the broader index following early 2020’s coronavirus-driven crash.

Metal and oil prices rose as investors bet on fresh US stimulus and major vaccine programs spurring a resurgence in commodity demand.

Vivendi topped the STOXX 600 with a 19.6pc jump after the French conglomerate said it intended to distribute 60pc of Universal Music’s capital to investors.

Shares of Groupe Bollore, which has a 27pc stake in Vivendi, jumped 14.6pc.

Historic monetary and fiscal stimulus has helped the benchmark STOXX 600 rebound about 55pc since slumping to a more than seven-year low in March 2020, although it has lagged the S&P 500 due to prolonged lockdowns in Europe.

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A recent Reuters poll found the euro zone economy was in a double-dip recession and that economists now expect GDP to contract 0.8pc in the first quarter, reversing an earlier forecast for growth of 0.6pc.

Asia

On Monday, Japan’s Nikkei 225 index closed above 30,000 for the first time since August 1990; it ended up 1.9pc to 30,084.15.

The strong buying in Tokyo was driven by news that the Japanese economy grew at a nearly 13pc annual pace in the last quarter, and by strong corporate earnings reports. It was the second straight quarter of growth after a downturn drastically worsened by the impact of the pandemic.

The recovery should put the economy on track to recover to pre-pandemic levels by next year, helped by a recovery in demand for exports in the US and other major trading partners, Marcel Thieliant of Capital Economies said in a report.

Japan recently re-imposed a state of emergency in Tokyo and several other prefectures to battle a resurgence of outbreaks. But sustained corporate investment and government spending are expected to help offset the impact on travel, restaurants and other sectors most affected.

“And while most economists expect a renewed contraction this quarter due to the second state of emergency, we think that output will be broadly flat in Q1 and rise more strongly this year than almost anyone anticipates,” Thieliant said.

Mainland Chinese markets and Hong Kong were closed on Monday for the Lunar New Year Break.

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Trading is set to resume in Hong Kong on Tuesday. Trading will resume in China on Thursday.

Currencies

The British pound climbed above $US1.39 for the first time in nearly three years, lifted by broad-based dollar weakness as well as by hopes for the end of a third national lockdown.

The reopening of the UK economy following the post Brexit re-rating could support sterling towards $US1.40, ING told clients in a note.

In contrast, the US dollar held near two-week lows. The offshore-traded Chinese yuan continued its recent rise and was on the cusp of breaking above 6.39 per dollar for the first time since June 2018.

Commodities

Gas shortage looms for NSW and Victoria by 2024: The Australian Competition and Consumer Commission has found gas prices are falling, but supply for southern states remains a concern.

CBA on the outlook for China demand: “Iron ore: We upgrade our price outlook over the next few years, but maintain our declining profile. Prices are likely to stay high in H1 2021 as China’s stimulus measures from 2020 keep China’s steel demand supported. But by H2 2021, we see iron ore prices falling more sharply as policymakers deprioritise growth in China’s commodity‑intensive sectors.”

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CBA is forecasting spot iron ore will decline to $US150 a tonne in March, to $US140 in June, $US120 in September and $US100 in December. It sees spot declining to $US90 by December 2022 and $US70 by December 2023.

Fitch said it too sees a decline ahead for iron ore. “We at Fitch Solutions believe that the Q220-Q420 surge in iron ore prices has run its course. Prices should grind lower during H121 as supply improves and demand growth slows.

“Nonetheless, the strong gains in iron ore prices during Q420 means that we have had to significantly revise up our average price forecasts for 2021 and 2022.

“Looking beyond 2021, we expect iron ore prices to follow a multi-year downtrend. We forecast prices to decline from an average $US90/tonne in 2021 to $US72tonne by 2025.”

Australian sharemarket

ASX rises 0.9 pc, buoyed by Zip, Nearmap: The Australian share market rallied on Monday, as Nearmap rebuffed a short-selling attack, the buy now pay later sector rallied and banks performed well.

ASX on backfoot in ASIC outage probe: Stockbrokers are bracing for a critical report on last November’s trading outage that could change expectations around their duties to clients.

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Street Talk

Canadian NorthWest locks in big AusUnity health fund investor

MacCap ramps up auction for CDH’s vitamins, honey

News Corp eyes slice of Australian sports betting market

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