The Business Times

Australia shares up, aided by solid GDP data; NZ hits a record

Published Wed, Sep 7, 2016 · 04:02 AM

[SYDNEY] Australian shares rose on Wednesday, tracking Wall Street, while data at home showing the economy last quarter expanded at its fastest annual pace in four years helped buoy sentiment.

The S&P/ASX 200 index was 10.8 points, or 0.2 per cent, higher at 5,424.4 at 0307 GMT.

The benchmark gained as much as 0.5 per cent after the Australian Bureau of Statistics reported gross domestic product (GDP) in April-June rose 3.3 per cent from a year earlier, just short of market forecasts but up from around 2.9 per cent in the previous quarter.

On Tuesday, the benchmark lost 0.3 per cent after the country's central bank held interest rates at a record low as expected, but provided no clues for future easing.

The US economy's service sector expanded at a slower pace in August than July, and the fall from the previous month was the largest since the 2008 financial crisis, according to an industry report released on Tuesday.

The chances of a US rate hike in September dropped to 15 per cent, from 21 per cent, after the data, according to CME Group's FedWatch tool.

Hawkish comments from some Fed officials recently increased the probability of a rate hike this year, but expectations declined since Friday's soft US jobs report.

"I think there has been some response to the prospects of US Fed not raising interest rates," said Ric Spooner, chief market strategist at CMC Markets.

Losses in Australian energy stocks were offset by substantial gains in cyclicals, basic materials and some financial stocks.

Gold miners posted massive gains with Northern Star Resources and Evolution Mining adding 9 per cent and 8 per cent respectively, as gold held steady early on Wednesday after rising as much as 2 per cent in the previous session.

Miner BHP Billiton gained 0.5 per cent while Rio Tinto Ltd was flat.

Commonwealth Bank of Australia, the biggest of the "Big Four" banks, rose 0.5 per cent.

The energy sector performed the worst as oil prices inched lower. Oil explorers Woodside Petroleum and Oil Search Ltd lost one per cent and 1.7 per cent respectively.

New Zealand's benchmark S&P/NZX 50 index rose to a record high, up 0.7 per cent, or 49.3 points, at 7552.9.

The gains were driven by cyclicals, staples and utility.

Dairy products maker A2 Milk was the biggest gainer on the index rising 4.6 per cent, while gaming business Skycity Entertainment and telco Chorus Ltd also added substantially at about 3 per cent each.

REUTERS

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