The Australian share market has closed slightly higher on Monday, helped by positive leads from US and European markets but the Australian dollar has taken a beating from lower commodity prices and the anticipation of higher US interest rates later this week.
The benchmark S&P/ASX200 index was up 10 points, or 0.17 per cent, at 5,959.4 points at 1630 AEDT on Monday, led by strength in the energy sector.
The Australian dollar was hanging around a three-month low, impacted by weak base metal prices and a stronger US dollar.
At 1630 AEDT, the Australian dollar was worth 76.93 US cents, down from 77.93 US cents on Friday.
AxiTrader chief market strategist Greg McKenna said the Australian dollar had had a rough time following weakness in Chinese markets for iron ore, coking coal and copper.
‘The kind of indicators that people look towards as drivers of the Aussie dollar are all pointing lower,’ Mr McKenna said.
He said the weaker commodity prices followed an agreement from Germany’s Chancellor, Angela Merkel, and China’s president Xi Jinping, to discuss solutions to global steel overcapacity.
Mr McKenna said other currencies linked to commodity prices, such as the New Zealand dollar and the Canadian dollar were also under pressure.
‘It’s a bit of a commodities bloc sell-off,’ he said.
Mr McKenna also said the US Federal Reserve is expected to lift interest rates later this week, which should strengthen the US dollar and perhaps weaken the Australian dollar further.
However, Mr McKenna said the Aussie could get some relief if the Federal Reserve’s commentary on Thursday morning, Australian time, is not as hawkish as people expect it to be.
Mr McKenna said the share market had performed reasonably well on Monday, with investors paying little attention to what is happening with bulk commodity prices.
Among the major miners, BHP Billiton rose 0.2 per cent to $29.23, Rio Tinto edged up 0.03 per cent to $76.64, and Fortescue Metals dipped 0.6 per cent to $4.75.
Energy companies benefited from a lift in Brent crude oil prices, with Woodside Petroleum up 1.5 per cent to $28.99, Santos surging 2.9 per cent to $5.03, and Oil Search lifting1.6 per cent to $7.18.
Among the big banks, Commonwealth Bank was 0.6 per cent lower at $74.89 as it warned staff that the banking royal commission will this week hear evidence about its unfair behaviour toward some customers.
National Australia Bank also eased 0.6 per cent to $29.34, ANZ slipped 0.07 per cent to $28.01, and Westpac was flat at $29.52.
Among consumer-related stocks, Coles supermarkets owner Wesfarmers retreated 0.6 per cent to $43.56 after making strong gains on Friday when it announced it will spin off Coles as a separate ASX-listed company.
ON THE ASX:
* The benchmark S&P/ASX200 index was up 10 points, or 0.17 per cent, at 5,959.4 points
* The broader All Ordinaries index was up 9.8 points, or 0.16 per cent, at 6,064.7 points
* The SPI200 futures contract was up 10 points, or 0.17 per cent, at 5,957 points
* National turnover was 3.2 billion securities traded worth $5.0 billion.