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Markets wrap: Prospect of improved Russia-Ukraine relations sparks risk-on rally for global stocks

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Global markets are soaring on new hopes a diplomatic solution can be found to end the bitter conflict between Russia and Ukraine.

Australia’s sharemarket joined a synchronised global rally on Thursday as the prospect of thawing relations between Russia and Ukraine nudged global investors back towards riskier assets.

Local traders were swept up in a flowing risk-on move across global equities, underpinned by optimism there may be a diplomatic solution to end the bitter war in Eastern Europe.

News that Ukraine President Volodymyr Zelenskyy was open to discussing Russia’s demand for neutrality – in return for security guarantees – proved a slave for investors concerned about global growth, with the ASX 200 joining the overnight surge started by US and European markets.

The local benchmark ended the day 77.8 points, or 1.1 per cent, higher at 7130.8 to make it back-to-back gains and continue a rollercoaster ride that began with Russia’s incursion two weeks ago.

The broader All ordinaries finished Thursday’s session 79.1 points, or 1.1 per cent, ahead at 7410.9 while the Aussie dollar was buying 73.11 US cents at the local close.

There were huge gains for riskier growth sectors such as technology and health care, while companies linked to consumer spending and travel also helped outweigh falls in the commodity price-affected mining and energy space.

Commonwealth Bank lifted 2.4 per cent to $99.74, while Westpac climbed 3.1 per cent to $22.65, National Australia Bank rose 3.5 per cent to $29.99 and ANZ added 2.7 per cent to $25.77.

Macquarie Group also surged, finishing the day 3.9 per cent higher at $185.59.

Afterpay owner Block rose 7.1 per cent to $151.24 and was joined in the winners’ circle by buy now, pay later rival Zip Co – up 4.6 per cent to $1.705 – as well as tech sector luminaries Appen, Computershare, Tyro Payments, Sezzle, Wisetech Global and EML Payments.

Blood giant CSL rose another 2.3 per cent to $263 to lift health care stocks, alongside a 2.5 per cent gain for Sonic to $33.90, a 1.5 per cent gain for Resmed to $33.40 and a 1.6 per cent rise for Cochlear to $217.89.

Improved hopes for peace unwound the recent “war rally” in oil and metals prices, with Brent crude sliding 12 per cent to $US112 a barrel and iron ore down nearly 3 per cent to $US157.55 a tonne.

City Index analyst Tony Sycamore said news the US had made progress towards OPEC+ increasing oil supply was encouraging, although he was doubtful member nations had the requisite stockpile to help fill the gap created by Russian sanctions.

Mr Sycamore was also cautious not to treat Thursday’s rise as a sign the wider volatility had passed.

“While it would be nice to see the overnight moves in both hold for more than one session, there are questions about how sustainable the moves are,” he said.

“Firstly, to the situation in Ukraine, Russian President Putin doesn’t appear to be the type of fellow to launch a full-blown invasion and then retreat without gaining a meaningful addition to Russian territory.

“In this context, it’s hard to see Putin agreeing to Ukraine’s demands.”

BHP fell 1.5 per cent to $47.75 and the ex-dividend Rio Tinto – which also announced it was severing ties with Russia – dropped 7.7 per cent to $110.61.

Fortescue Metals fell 3.4 per cent to $18.20, Mineral Resources dropped 4 per cent to $45.19, and ex-dividend South32 lost 3.7 per cent to $4.75.

The safe-haven appeal of gold also dulled, with Newcrest Mining duly dropping 4.2 per cent to $27.02 and Northern Star and Evolution each 1.5 per cent down.

Woodside Petroleum fell 4.7 per cent to $31.65, Santos 2.4 per cent to $7.59 and Beach Energy was 5.9 per cent down to $1.595 as it continues its search for a chief executive officer.

Nonetheless, the diplomatic development in Europe sent investors piling into firms that stand to benefit from a more stable environment for travel and spending.

National airline Qantas gained 5.8 per cent to $4.93, while travel broker Flight Centre bounced 6.6 per cent to $18.87, Webjet rose 5.8 per cent to $5.63 and Corporate Travel improved by 5.1 per cent to $22.22.

Toll road operator Transurban gained 2.5 per cent to $12.81 and retail empire Wesfarmers finished 2.5 per cent ahead at $50.11.

Department store Myer – boosted by the prospect of its first dividend in five years – finished the day 24.4 per cent higher at 51 cents.

The ASX 200 has now added 2.1 per cent in two sessions to lift investors from five-week lows and back towards the pre-war footing of late February.

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