Market wrap: Surge in real estate stocks pushes ASX higher

A bounce in real estate stocks and renewed optimism around Chinese economic growth lifted the Australian sharemarket on Monday, with the benchmark ASX 200 closing in on record highs.

The Index rose 0.53 per cent, or 41.3 points, to end the day at 7811.90 — inching closer to its early March all-time high of 7847.

The broader All Ordinaries index lifted 0.56 per cent, or 45.2 points, to finish at 8071.5, while technology stocks booked a handsome 0.95 per cent gain to close at 3119.0.

The Aussie dollar gained 0.2 per cent against the greenback to buy US65.2c at the closing bell.

Ten of 11 industry sectors ended in the green, with only discretionary recording a slight 0.01 per cent decline.

The rate-sensitive real estate sector pushed the market higher with a 1.76 per cent gain, following by energy with a 1.13 per cent lift and health care with a 1.01 per cent rise.

eToro market analyst Josh Gilbert credits last week’s dovish tilt from central bankers for renewed investor confidence in real estate businesses.

“The best sector of the day was real estate and that can be put down to the dovish nature that we had from central banks last week,” he said on Monday.

“Overall we have come off the back of a very risk heavy week and we’ve come through it with what I think is a pretty positive end to that week, where we have not really seen central banks go any tougher than what we expected.

“If anything, they have become slightly more dovish and I think that has helped markets and that is why we are seeing real estate do well and those sort of rate sensitive sectors.

“The closer we get to rate cuts, the more we are going to see investors rotate into cheaper, cyclical assets such as real estate and healthcare.”

Last Thursday morning, the US Federal Reserve maintained its outlook for three interest rate cuts this year and the ASX rallied across Thursday and Friday in response.

Real estate heavyweight Goodman Group jumped 3.83 per cent on Monday to hit $33.28 a share while Mirvac lifted 2.24 per cent to hit $2.28 a share and Lendlease rose 1.24 per cent to close at $6.54.

Iron ore heavyweights BHP, Rio Tinto and Fortescue all rose again on renewed optimism around economic growth in China.

Fortescue led the giants with a 3.49 per cent surge to $25.50.

But Mr Gilbert expressed caution whether last week’s commodities rally and Monday’s lift signalled a lasting turnaround for the materials sector.

“It’s really difficult to try and gather whether this is going to continue,” he said.

“We’ve had this so many times over the last 12 months, where we have got some optimism from China, where they have said once again they are going to hit that five per cent growth target but they have not signified how they are going to get there.”

In corporate news, real estate firm McGrath blasted higher 24.47 per cent to 58c a share on the news global property firm Knight Frank has put in an offer to buy up the company.

Knight Frank and New Zealand real estate company Bayleys are offering McGrath shareholders 60c a share to take over the residential property business and the McGrath board has recommended shareholders agree to the scheme.

Offshore maritime services provider MMA Offshore also soared on a takeover deal, rising 10.64 per cent to hit $2.60 after it entered a binding agreement with Cyan Renewables, an offshore vessel portfolio company and a subsidiary of Singapore-based Seraya Partners.

The buyout offers MMA shareholders $2.60 a share.

The top gainer on the ASX 200 was West African Resources, which jumped 5.04 per cent to settle at $1.14.

The biggest laggard was ALS Limited, which fell 4.8 per cent to end at $13.07.