Australia shares pushed up by defensives, energy; NZ higher

[BENGALURU] Australian shares rose on Monday, with broad-based gains led by defensives and energy stocks, after the Australian government offered a solid, if not stellar, financial outlook and two rating agencies affirmed their triple-A ratings.

Rating agency Fitch, noting Australia's government forecast a A$10 billion (S$10.5 billion) deterioration in its budget deficit over the next four years, but still hoped to manage a surplus by 2020/21, said Australia was still consistent with a triple-A rating.

That view was followed some time later by the Moody's rating agency. Standard and Poors had not commented by 0225 GMT.

There was significant investor concern over reports that earlier suggested Australia may be downgraded from its top credit rating. "It (the Fitch rating affirmation) is probably going to give a minor confidence boost to the markets. I guess they (investors) would be looking out for what Moody's and S&P have to say," said Ric Spooner, chief market strategist with CMC Markets.

The S&P/ASX 200 index was 0.7 per cent, or 39.17 points, higher at 5,572.1 at 0221 GMT.

The US Federal Reserve tightening monetary policy and suggesting a more vigorous rate rise cycle for next year had dampened market spirit last week, sending the benchmark 0.5 per cent lower on the week.

Aussie stocks, otherwise, have been in line with a global inflation rally that was triggered in October.

Defensives, considered a safe bet during periods of uncertainty, steered the rally. Utilities, telcos and healthcare stocks were the biggest gaining sectors.

Natural gas infrastructure business APA Group, up 2.4 per cent, received support from higher oil prices.

Oil major Woodside Petroleum was 0.8 per cent higher, while Oil Search Ltd and Santos Ltd each added about 0.6 per cent.

Financial stocks, often the reapers of reflation trade, posted gains with the financial index 0.3 per cent higher. The "Big Four" major banks gained in the range of 0.1 to 0.5 per cent.

Basic materials, undeterred by the 14-year US dollar high, jumped on to the bandwagon. Major miners Rio Tinto and BHP Billiton were over 1 per cent higher.

New Zealand's benchmark S&P/NZX 50 index was 0.5 per cent higher at 6,791.55 led by defensives and consumer stocks.

Bank of New Zealand-Business NZ's performance of services index (PSI) showed 1.3-point growth New Zealand's services sector in November to 57.9, making November one of the strongest months of activity in 2016. Meanwhile, a a Westpac survey showed consumer confidence rising 5.2 per cent in the fourth quarter.

Building materials manufacturer Fletcher Building and SKY Network Television Ltd were each 1.7 per cent higher.

Infrastructure firm Infratil and electricity generator Genesis Energy were the biggest gainers on the benchmark, adding 3.5 per cent and 2.5 per cent respectively.

REUTERS