Mining and energy stocks drove the Australian market to its highest level since late January, while oil prices jumped 8 per cent as European Union nations considered whether to join the United States in boycotting Russian oil.
The ASX 200 closed 0.9 per cent higher at 7,341 points on Tuesday. At its intraday peak, the local stock index had climbed by as much as 1.3 per cent.
By 4:20pm AEDT, the greenback had risen slightly, dragging the Australian dollar below 73.9 US cents.
Foreign markets fell after US Federal Reserve chair Jerome Powell suggested America's interest rates would have to rise much faster than previously anticipated.
Wall Street snapped a five-day winning streak after the Fed chairman made those remarks on Monday (local time), at the National Association of Business Economics conference.
The Dow Jones index closed 0.6 per cent lower at 34,553 points, the S&P 500 was marginally lower at 4,461, and the Nasdaq Composite fell 0.4 per cent to 13,838.
Shares of Boeing slid 3.6 per cent after one of its 737-800 aircraft, operated by China Eastern Airlines, crashed in southern China with no apparent survivors.
Meta's share price dropped 2.3 per cent after a Moscow court labelled the US social media company an "extremist organisation," upholding a decision to ban Facebook in Russia.
'Hell of a progression' on inflation
Mr Powell said the Fed must move "expeditiously" to combat "much too high" inflation, adding that bigger-than-usual interest rate hikes could be deployed if needed.
In particular, the US central bank chief added: "If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so."
In relation to Mr Powell's latest comments about inflation, Oliver Pursche, senior vice-president at Wealthspire Advisors in New York, said: "Three months ago, it was 'transitory', a month ago it was 'elevated'. That's a hell of a progression."
"And the market is trying to figure it out, what those statements mean as it pertains to interest rate hikes and whether it increases the likelihood of a couple of 50-basis-point hikes down the road," Mr Pursche added.
Fed policymakers last week raised interest rates (by 25 basis points) for the first time in three years, and signalled there could be six more rate hikes in 2022.
Fed funds futures now imply a 61 per cent chance of a 50-basis-point hike in key interest rates at the Fed's next meeting in May (up from 52 per cent before the text of Mr Powell's speech was released).
Commodities boom
Mining and energy stocks, including Liontown Resources (+6.3pc), BHP (+5pc), Mineral Resources (+4.8pc), Paladin Energy (+4.2pc) and Whitehaven Coal (+4pc), were some of the best performers.
At the other end of the spectrum, tech-related stocks like Life360 (-4.7pc), Zip Co (-4.1pc), Pointsbet (-3.3pc), Appen (-3.1pc) and Xero (-2.7pc) suffered heavy losses.
Shares of building materials maker Boral fell by 3.5 per cent. This was after the company revealed that its earnings have been adversely affected by the recent rainfall in New South Wales and Queensland, along with sharp increases in fuel and coal prices.
Boral said this led to a drop in its sales volumes, resulting in a $23 million hit to its earnings.
New Hope Corporation's stock jumped 8.5 per cent after the Brisbane-based coal miner announced a big payout to shareholders, helped by surging prices of thermal coal in its key markets.
The miner declared a fully franked interim dividend of 17 cents per share (far higher than the 4 cents per share it paid a year ago), along with a special dividend of 13 cents per share.
This was after New Hope reported a half-year profit of $330.4 million (compared with a loss of $55.4 million a year earlier).
Coal producers in Australia are in high demand over the past two weeks from countries like Poland which have been reliant on Russian supply, with New Hope examining similar opportunities to supply European markets.
New Hope said it is expecting demand for high quality, lower emission thermal coal to remain strong in the short- to medium-term as supply remains constrained and ongoing shortage is expected to keep prices at levels not previously experienced.
Ramsay receives $1.8b for its Asian joint venture
Ramsay Health Care and Malaysia-based Sime Darby Holdings have received a $1.8 billion buyout offer for their 50/50 Asia joint venture (Ramsay Sime Darby).
The potential buyer is Asia’s largest private healthcare company (IHH Healthcare Berhad), Ramsay revealed in a statement.
IHH confirmed the conditional, non-binding proposal in a separate statement, saying the talks were in preliminary stages and that there was no certainty the deal would materialise.
Ramsay, which is Australia's biggest hospital operator, and Sime have agreed to a period of exclusivity for four weeks to allow Malaysia's IHH to conduct due diligence and negotiate a sale and purchase agreement.
Shares of Ramsay Health Care gained 1.3 per cent
Confidence plummets on rising petrol prices
Consumer confidence has plunged to its lowest level since early September 2020, when Victoria endured its second wave of COVID-19 infections, according to ANZ economists.
ANZ's report indicates that consumer sentiment dropped 4.8 per cent last week (to 91.2 points) as fuel prices and inflation expectations continue to surge.
A result below 100 means the number of pessimists outweigh the optimists.
"Increasing petrol prices have had a sharp impact on households’ confidence for both 'current' and 'future financial conditions' with the two subindices dropping 10.3 and 8.4 per cent respectively over the last two weeks," said David Plank, ANZ's head of Australian economics.
"We noted last week that the weakness in consumer sentiment is at odds with the strength in employment and reflects pressure on household budgets as nominal wage growth lags the jump in inflation.
"The weakness in consumer confidence presents a growing near-term risk to the outlook for household spending.
Oil prices surge as Europe disagrees on sanctions
On oil markets, Brent crude surged 8 per cent to $US116.53 a barrel, as the European Union's foreign ministers disagreed on Monday about whether and how to slap sanctions on Russia's lucrative energy sector over its invasion of Ukraine.
Targeting Russian energy exports, as the United States and Britain have done, is a divisive choice for the 27-nation EU, which relies on Russia for 40 per cent of its gas.
Some of those who want the EU to go further showed impatience at the pace of the talks after a meeting of EU foreign ministers in Brussels.
"Why should Europe give Putin more time to earn more money from oil and gas? More time to use European ports? More time to use unsanctioned Russian banks in Europe? Time to pull the plug," Lithuania's Foreign Minister, Gabrielius Landsbergis, said on Twitter.
Germany and the Netherlands said the EU was dependent on Russian oil and gas and could not cut itself off right now.
"The question of an oil embargo is not a question of whether we want or don't want [it], but a question of how much we depend on oil," German Foreign Minister Annalena Baerbock told reporters.
"Germany is importing a lot [of Russian oil], but there are also other member states who can't stop the oil imports from one day to the other," she said, adding that the bloc should instead work on reducing its reliance on Moscow for its energy needs.
Adding to the oil market's volatility, over the weekend, attacks by Yemen's Iran-aligned Houthi group caused a temporary drop in output at a Saudi Aramco refinery joint venture in Yanbu.
Saudi Arabia, on Monday, said it would not be responsible for any global oil supply shortages after these attacks.
ABC/Reuters
