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Biotech firm Starpharma soared 73 per cent after saying it signed a collaboration and licence deal with Genentech, a US subsidiary of Swiss pharmaceutical giant Roche, to develop cancer therapies.

Plumbing and bathroom supplies giant Reece rallied 14.2 per cent to $11.78 after it announced a $250 million share buyback scheme for between $11 and $13 a share. It was the ASX 200’s best performer.

The laggards

Having opened higher, the big four banks turned red mid-morning, limiting gains for the ASX as the financial sector makes up about a third of the market. CBA, the biggest stock on the local bourse, dropped 0.4 per cent. National Australia Bank shed 0.3 per cent. Having swung between gains and losses during the session, Westpac and ANZ finished flat.

Energy stocks declined too. Oil and gas giant Woodside lost 1 per cent after oil prices slipped last week. Viva Energy slumped 8.1 per cent after revealing the head of its 900 petrol station convenience stores, Jevan Bouzo, has resigned and will leave at the end of the year.

However, Santos edged up 0.4 per cent on news it has begun production at its $US4.5 billion Barossa field off northern Australia, a move towards a much-anticipated increase in output as the company recovers from a third failed takeover bid, which sent its stock down by more than 10 per cent last week.

Regis Healthcare plummeted by 26.3 per cent after announcing a government funding increase to the Australian National Aged Care Classification fell short of expectations and wasn’t enough to offset rising staffing costs, weighing on its earnings growth.

The lowdown

The early rally on the ASX, which fizzled out by midday, came after US interest rate cuts helped send Wall Street’s three major indexes and gold prices to record highs last week.

“As company reporting season winds down and the US Federal Reserve’s policy direction is clear, investors may now turn to macroeconomics and geopolitics as drivers of market action,” Moomoo market strategist Michael McCarthy said.

“US stocks finished strongly last week, giving markets in the Asia-Pacific region a positive impulse at the open today.”

The S&P 500 rose 0.5 per cent on Friday to close out its sixth winning week in the last seven. The Dow Jones Industrial Average added 172 points, or 0.4 per cent, and the Nasdaq composite climbed 0.7 per cent. All three indexes hit all-time highs for a second straight day. They’ve been rallying on expectations that the Fed will continue to cut rates to give the world’s largest economy a boost.

Looking at the local outlook for interest rates, Australia’s central bank governor Michele Bullock said on Monday the Reserve Bank’s interest rate-setting board will weigh recent evidence showing the economy has been performing in line or slightly stronger than anticipated at next week’s policy meeting.

Inflation has fallen “substantially” to be inside the RBA’s 2 per cent to 3 per cent target and the labour market is “close to full employment”, Bullock said in her opening remarks to a parliamentary panel in Canberra on Monday.

The comments leaned hawkish and sent yields on policy-sensitive three-year government bonds a tad higher while the Aussie dollar pared some of its losses. Traders still see a good chance of the next Reserve Bank cut in November, though they trimmed the probability to around 80 per cent now from roughly 90 per cent before to the governor’s comments.

“Since the August meeting, domestic data have been broadly in line with our expectations or if anything slightly stronger – the board will discuss this and other developments at our meeting next week,” Bullock said.

The central bank is widely expected to keep borrowing costs unchanged at 3.6 per cent next Tuesday, having embarked on a policy easing campaign this year and cut rates three times since February. Most economists expect it to reduce rates in November and follow that up with one more cut early next year.

With AP, AAP, Bloomberg

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