Australian share rally stalls after credit outlook downgrade, NZ up

[SYDNEY] Australian share market gains were capped on Thursday after Standard & Poor's downgraded the nation's credit outlook from stable to negative, but New Zealand shares edged higher.

The S&P/ASX 200 index rose 20.55 points to 5,218.1 points by 0212 GMT. The benchmark climbed 0.4 per cent on Thursday, but the bourse had rallied as high as 5,244.1 earlier in the day.

Banking stocks had led the rally, as Prime Minister Malcolm Turnbull firmed as the likely winner of Saturday's close-run general election. His opponents had promised a broad-based public inquiry into the sector.

"I think a Liberals majority should be very positive for the market, especially the banks," said senior portfolio manager Andrew Ward, of Aurora Funds Management.

"However, I see that S&P revised their outlook and I think that will weigh on the banks a little and because the banks are such a big part of the index, it does affect the index."

The rating agency cut Australia's credit outlook to negative, saying the July 2 election may have weakened the government's ability to tackle its budget deficits, and warned of a downgrade to the nation's triple-A credit rating within two years.

Three of Australia's big four banks, posted modest gains, but National Australia Bank Ltd slipped 0.08 per cent.

Rising commodity prices supported share price rises in the resource sector, with BHP Billiton Ltd adding 2.57 per cent, South32 Ltd gaining 2.35 per cent and gold miner Newcrest Mining Ltd rising 0.77 per cent.

But utilities weighed on Australia's market, with AGL Energy Ltd falling 4.5 per cent after announcing that higher wholesale gas prices had hit profits.

Construction firm CIMIC Group Ltd, formerly called Leighton Holdings, fell 11.1 per cent after Morgan Stanley released a bearish report on the stock.

Shares in Tabcorp Holdings Ltd fell 4.47 per cent on news that New South Wales state would ban greyhound racing in 2017. The initial public offering of e-tailer Kogan.com Ltd had a negative start, falling 12.22 per cent in its first hour of trading.

New Zealand's benchmark S&P/NZX 50 index rose 0.5 per cent or 32 points to 7,009.15 on Thursday, tracking a slight rise on Wall Street after further evidence the Federal Reserve is likely to hold off raising interest rates any time soon.

The biggest gainers included retirement village owner and operator Summerset Group, up 3.5 per cent. Earlier on Thursday, the company said it had record sales in the first half of the financial year.

The biggest losers included Port of Tauranga, which slid 2.0 per cent.

REUTERS