Weak inflation, lower $A help lifts shares

Trevor Chappell
(Australian Associated Press)

 

The Australian share market gained ground as the Australian dollar hovered at a four-month low and inflation remained below the Reserve Bank’s target range.

The benchmark S&P/ASX200 index added 35.6 points, or 0.6 per cent to 5,921.6 points, while the broader All Ordinaries index gained 33.4 points, or 0.56 per cent, to 6,009.4 points.

All sectors of the market were stronger, with the exception of the miners.

March quarter inflation was slightly weaker than expected at 0.4 per cent, taking the annual rate to 1.9 per cent, below the RBA’s target range of two to three per cent.

The figures have not altered expectations that interest rates will remain unchanged for some time, and Phillip Capital senior client adviser Michael Heffernan said market sentiment was positive.

“We’ve seen the consumer price index not frightening the horses, so there’s a bit of comfort there,” he said.

“And you’ve got overseas markets not collapsing in a heap, commodity prices are not too bad either, and the Australian dollar is going down.

“So you’ve got all these factors, put them all together, and the end result is that we’re going up.”

The big four banks posted a second straight day of gains, as investors buy again following recent share price falls amid details of misconduct coming from the financial services royal commission.

Commonwealth Bank rose 1.1 per cent to $73.46, National Australia Bank climbed 1.1 per cent to $29.08, Westpac found 1.1 per cent to $29.18 and ANZ lifted 0.7 per cent to $27.15.

Wealth management giant AMP neared six-year lows, dropping 2.6 per cent to $4.06.

Three law firms are now investigating class actions against AMP on behalf of shareholders, after its admission to cheating customers and lying to the corporate regulator.

Aluminium producers were pummelled as aluminium prices suffered their biggest one-day dive in eight years after Washington extended a deadline for US customers of Russian producer Rusal to conclude dealings with the sanctions-hit business.

South32 plunged 9.6 per cent to $3.58 and Alumina descended 6.8 per cent to $2.62.

Rio Tinto fell 2.6 per cent to $79.52, BHP Billiton added 0.1 per cent to $31.27 and Fortescue Metals retreated 2.4 per cent to $4.57 after it reported a fall in iron ore shipments in the third quarter.

Building products supplier Boral sank 8.6 per cent to $6.88 – a near seven-month low – after it said March quarter earnings in its Australian and US operations were below expectations.

The Australian dollar picked up a little after the release of the inflation figures, however higher US bond yields and a strengthening US dollar kept the local currency at around 76 US cents.

ON THE ASX:

* The benchmark S&P/ASX200 was up 35.6 points, or 0.6 per cent, at 5,921.6 points

* The broader All Ordinaries index was up 33.4 points, or 0.56 per cent, at 6,009.4 points

* The SPI200 futures contract was up 37 points, or 0.63 per cent, at 5,905 points.

* National turnover was 3.6 billion securities traded worth $7 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

One Australian dollar buys:

* 75.98 US cents, from 76.71 US cents on Monday

* 82.70 Japanese yen, from 82.71 yen

* 62.25 euro cents, from 62.49 euro cents

* 54.54 British pence, from 54.70 pence

* 106.91 NZ cents, from 106.47 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,326.23 per fine ounce, from $US1,344.50 per fine ounce on Monday.

BOND SNAPSHOT AT 1630 AEST:

* CGS 5.75 per cent May 2021, 2.2376pct, from 2.2683pct on Monday

* CGS 2.25pct May 2028, 2.8396pct, from 2.865pct

Sydney Futures Exchange prices:

* June 2018 10-year bond futures contract was 97.145 (implying a yield of 2.855pct), from 97.120 (2.880pct) on Monday

* June 2018 3-year bond futures contract was 97.720 (2.280pct), from 97.690 (2.310pct)

(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)

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