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Australia shares extend gains as 'big four' banks rally; NZ at 8-month high


[BENGALURU] Australian shares extended prior session gains on Thursday, as investors ploughed into the financial sector after chief executives of the 'big four' banks hinted that costs from the recently announced federal tax could be passed on to customers.

The S&P/ASX 200 index rose 0.6 per cent, or 35.761 points to 5,911.2 by 0207 GMT.

The tax on liabilities unveiled in Tuesday's federal budget caught banks, which had previously enjoyed the support of the ruling centre-right government, unawares and was criticised by bank executives.

Commonwealth Bank of Australia (CBA) Chief Executive Ian Narev indicated the bulk of the cost could be passed on to customers, likely through interest rate changes.

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CBA advanced as much as 1.5 per cent for its biggest intra-day per centage gain in six weeks, with the other three major banks enjoying strong gains.

"I think there was quite an over-sell on the back of the news of the new levy", said James McGlew, executive director of corporate stock-broking at Argonaut. "The reality is these costs will be passed on to customers anyway. So, the net effect on the bottom line is not as damaging as the sell-off for the last few days suggested," McGlew added.

Australia's biggest investment bank Macquarie Group climbed 2.1 per cent and remains on track to snap a three-day losing streak.

A consortium led by Macquarie acquired Australian power grid Endeavour Energy, a source familiar with the matter said on Thursday.

Elsewhere, strong earnings from Graincorp Ltd propelled its stock up 9 per cent - the biggest per centage gainer on the index.

Australia's largest listed grain handler said its half-year underlying profit more than tripled as a record wheat crop underpinned revenue growth.

Among the miners, BHP Billiton Ltd rose 0.8 per cent and remains on track for its fourth-straight session of gains, supported by strength in oil and steel prices.

On the downside, Australia's biggest wealth manager AMP Ltd was among the biggest drags, slipping 1.3 per cent.

The company reported a 19 per cent increase in first quarter outflows, resulting in a net cash outflow of A$199 million ($146.0 million).

New Zealand's benchmark S&P/NZX 50 index rose 1 per cent or 73.07 points to an eight-month high of 7,497.27.

The gains were broad based with all sectors in the black.

In an interview with Reuters, Reserve Bank of New Zealand (RBNZ) Assistant Governor John McDermott said underlying inflation expectations in the country had not changed substantially from three months ago and the central bank has a neutral bias on interest rates.

Xero Ltd and A2 Milk Ltd were among the biggest per centage gainers on the index, climbing 5.3 per cent and 3.5 per cent respectively.