Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Australian shares have closed higher, with investors appearing to take a punt on positive news coming out of the US Federal Reserve’s policy meeting later on Wednesday.
The S&P/ASX200 benchmark index closed around the day’s highs, rising 61.3 points, or 1.04 per cent, to 5956.1 points.
The All Ordinaries index finished up by 67.6 points, or 1.11 per cent, at 6146.9.
“I am surprised that it’s been so positive,” Investsmart market strategist Evan Lucas told AAP.
“There is a risk event and a very big risk event in the US Federal Reserve tonight.”
The rally across all sectors of the market ran on very little fresh news and came in front of Australia’s own crucial jobs figures for August, to be released on Thursday, which economists expect will see a further rise in unemployment.
Forecasts centre on a rise in the jobless rate to 7.7 per cents from 7.5 per cent in July, having been at 5.1 per cent at the start coronavirus pandemic.
The number of people in employment as of August is expected to fall by around 35,000, ending two months of exceptionally strong increases as restrictions were unwound nationally.
“It will finally fully take into consideration the Victorian lockdowns,” Mr Lucas said.
The latest Westpac-Melbourne Institute leading index continued to show a gradual improvement after hitting a low-point in April, but still signalled an Australian economic growth rate below the long-term trend of 2.75 per cent.
Miners remained largely upbeat after China’s positive economic data on Tuesday, with BHP up 1.4 per cent at $38 and Rio Tinto rising 0.6 per cent to $102.78.
China’s recovery from a deep economic contraction at the beginning of the year, when the COVID-19 outbreak began, comes at a testing time for Australia’s relationship with its number one trading partner.
Senior advisor to Prime Minister Scott Morrison and businessman Andrew Liveris says China will remain a big consumer of Australian goods.
“We’ve got to keep developing that relationship for our own mercantile benefit and, frankly, for theirs,” Mr Liveris, a former CEO of the Dow Chemical Company, told the National Press Club in Canberra.
Major bank shares ended mixed.
Commonwealth Bank was up 1.0 per cent at $65.70, and Westpac was up 0.2 per cent at $16.76, but the ANZ was down 0.3 per cent at $17.30 and NAB was off 0.1 per cent at $17.15.
Interest rate futures imply a Reserve Bank cash rate of just 0.11 per cent by the end of the year, compared to the current record low rate of 0.25 per cent that has stood since March.
The central bank board earlier this month agreed to maintain highly accommodative settings as long as required, but said it will also “continue to consider how further monetary measures could support the recovery”.
That said, governor Philip Lowe has repeatedly indicated that 0.25 per cent is as low as the bank wants to go in terms of the cash rate.
US stocks ended slightly higher on Tuesday, led by a tech sector that is trying to recoup its recent steep losses.
The Aussie dollar was buying 73.16 US cents at 1703 AEST, above an earlier low of 72.88 US cents, but just down from 73.18 US cents at the close on Tuesday.
ON THE ASX
* The S&P/ASX200 benchmark index closed up 61.3 points, or 1.04 per cent, at 5956.1 points on Wednesday.
* The All Ordinaries index finished higher by 67.6 points, or 1.11 per cent, to 6146.9.
* At 1703 AEST, the SPI200 futures index was trading up three points, or 0.05 per at 5966 points.
One Australian dollar buys:
* 73.16 US cents, from 73.18 US cents on Tuesday
* 77.09 Japanese yen, from 77.37 yen
* 61.72 Euro cents, from 61.58 cents
* 56.76 British pence, 56.95 pence
* 108.67 NZ cents, from 108.95 cents