You are here

Australia: Shares rise as banks ride rate cut hopes, NZ also firmer

ausstocks290416.jpg

[SYDNEY] Australian shares ignored Wall Street's downbeat cue to rise on Friday as resources stocks rode a commodity rally higher and banks firmed on hopes of a rate cut.

New Zealand shares also gained.

Base metals, gold and oil all rose in overnight trading on optimism about rising Chinese demand, prompting investors to buy resources stocks.

Banks meanwhile gained after unexpectedly weak Australian economic data earlier in the week stoked speculation that the Reserve Bank of Australia could cut rates, spurring lending demand, though the majority of economists still saw the central bank leaving its cash rate unchanged at a record low of 2.0 per cent.

After slipping at the open, the S&P/ASX 200 index was up 22 points, or 0.4 per cent, at 5,246.8 by 0245 GMT. The benchmark has gained 6 per cent since April 11.

"It's very much buoyed by the banks," said James McGlew, head of corporate stockbroking at Argonaut Stockbroking.

"The (consumer price index) number gave the Reserve Bank wriggle room to contemplate an extra cut and we're seeing some shoots of green again in the resources sector."

Westpac Banking Corp rose 1.4 per cent, while Australia and New Zealand Banking Group added 1.3 per cent, National Australia Bank gained 1 per cent and Commonwealth Bank of Australia firmed 0.6 per cent.

All the banks report results next week.

Gold producer Newcrest jumped 4 per cent to lead the resources sector higher following a gain in the precious metal's price. Iron ore major Rio Tinto gained 1.5 per cent and smaller Fortescue Metals Group added 1.9 per cent, while BHP Billiton declined 0.5 per cent.

The biggest gainer was immigration detention centre operator Broadspectrum, up 32 per cent, after bowing to a takeover bid from Spain's Ferrovial SA as a result of plans by Papua New Guinea to shut down a refugee camp there.

New Zealand's benchmark S&P/NZX 50 index rose 0.3 per cent or 21 points to 6,810.96, also defying the slide on Wall St.

The market was boosted by a 10.5 per cent gain in Z Energy after New Zealand's Commerce Commission cleared it to buy Chevron New Zealand, subject to some divestments.

In the other direction the index was weighed by a 5.8 per cent fall in rubber products maker Skellerup and a 5.4 per cent slide in outdoor apparel maker Kathmandu.

REUTERS