Optimism lifts Aussie shares to 1-year closing high
Australian shares rose 1.6 per cent on Tuesday to their highest close in a year, led by resources firms and banks as a burst of merger activity in the United States boosted confidence in an economic recovery.world Updated: Sep 29, 2009 13:40 IST
Australian shares rose 1.6 per cent on Tuesday to their highest close in a year, led by resources firms and banks as a burst of merger activity in the United States boosted confidence in an economic recovery.
The US deals had investors betting mergers would also pick up in Australia as the domestic economy staged a firm recovery.
Miner BHP Billiton Ltd and banks including Commonwealth Bank of Australia were among the top gainers.
"There was money flowing into mining, energy and banking stocks today as expected, when you get a lift in confidence, but we also saw heavy buying in healthcare and consumer staples as well, and that really provided the market with a bit of a boost," said David Taylor, an analyst at CMC Markets.
The benchmark S&P/ASX index jumped 75.7 points to 4,753.1, according to the latest available data, its highest close since Oct. 2, 2008.
Aussie stocks are on track to post their biggest quarterly gain in 22 years, according to CommSec. New Zealand's benchmark NZX 50 index rose 0.8 per cent to 3,155.4.
Low interest rates, government spending and a realisation that the market might have fallen too far were behind the renewed optimism, said Michael Heffernan, senior client advisor at Auststock Group.
He saw the market gaining further, but in a zig-zag fashion.
"We're up 1.7 per cent today but we're not going to do this every day," Heffernan said.
BHP Billiton rose 2.4 per cent to A$37.99 and rival Rio Tinto gained 1.7 per cent to A$59.67.
Among banks, Commonwealth rose 2.1 per cent to A$52.10, National Australia Bank rose 2 per cent to A$31.22, Australia & New Zealand Banking Group rose 1.6 per cent to A$24.73 and Westpac Banking Group rose 1.3 per cent to A$26.43.
Optimism about the economy helped lift the discretionary retail sector by 1.1 per cent. Electricals and furniture retailer Harvey Norman gained 1.9 per cent to A$4.27 and electronics retailer JB Hi-Fi rose 2.2 per cent to A$19.58.
Shares in Western Plains Resources, which is in partnership with China's state-owned Wuhan Iron and Steel, was among the decliners.
Western Plains shed 5.6 per cent to A$0.25 after Australia's military reiterated its opposition to its plan to develop a magnetite project within a weapons-testing zone.