A surge in support for the banks – despite a highly critical regulator’s report on failings at the nation’s biggest lender – has led the Australian share market to close above 6,000 points for the first time since February.
The benchmark S&P/ASX200 index ended Tuesday up 32.5 points, or 0.54 per cent, at 6,015.2 points, while the broader All Ordinaries index was up 28.4 points, or 0.47 per cent, at 6,100.0 points.
The SPI200 futures contract was up 27 points, or 0.45 per cent, at 5,993.0 points.
The financial sector posted its biggest single-day gain since the financial services royal commission was announced in November and banks have now recovered from the heavy falls suffered in the wake of a critical UBS report on Westpac’s mortgage book last Thursday.
ANZ shares lifted 63 cents, or 2.4 per cent, to $27.47 after reporting a 16 per cent fall in first-half profit to $2.88 billion in a result largely in line with expectations.
Commonwealth Bank also rose strongly despite the release of financial regulator’s damning report into the bank’s culture, which found Australia’s biggest lender was complacent, insular and ignored risks while business was profitable.
CBA shares closed $1.35, or 1.9 per cent, higher at $73.17 while National Australia Bank lifted 1.7 per cent, to $29.45 and Westpac shares were 1.4 per cent higher at $29.05.
Fairmont Equities managing director Michael Gable said he had expected support for bank stocks to kick in with dividend dates looming for some institutions but Tuesday’s gains were hard to pin to any one factor.
“It’s simply a case of them being quite oversold and I think they’ve held up pretty well considering the banking royal commission,” Mr Gable said.
“Everyone’s focus has gone back to the dividend.”
He said he wouldn’t be surprised if the overall market experienced some softness over the next few weeks now it’s topped the 6,000 point mark.
“We’re finding investors taking some profits off the table and getting ready for the next dip,” he said.
“A decent dip isn’t off the cards.”
Elsewhere in the market, energy stocks rosewith Oil Search up 7 cents or 0.8 per cent to $7.91 while Woodside improved by 0.6 per cent to finish at $32.42.
Rio Tinto dipped 16 cents, or 0.2 per cent, to $79.70 after the corporate regulator hit the miner and two former executives with fresh allegations related to the mining giant’s handling of disclosures around its disastrous $US4 billion coal investment in Mozambique in 2012.
The Reserve Bank left the official cash rate at 1.5 per cent for the 21st consecutive month, saying weak household spending and sluggish wages growth remain a concern for the economy.
RBA governor Philip Lowe kept his comments on employment, inflation and the state of the housing market virtually unchanged from his April statement.
Meanwhile, the Australian dollar fell slightly against a broadly stronger US dollar.
At 1700 AEST, the local currency was worth 75.25 US cents, from 75.59 US cents on Monday.
ON THE ASX:
* The benchmark S&P/ASX200 closed up 32.5 points, or 0.54 per cent, at 6,015.2 points
* The broader All Ordinaries index was up 28.4 points, or 0.47 per cent, at 6,100.0 points
* The SPI200 futures contract was up 27 points, or 0.45 per cent, at 5,993 points
* National turnover was 3.4 billion securities traded worth $6.6 billion
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 75.25 US cents, from 75.59 on Monday
* 82.35 Japanese yen, from 82.55 yen
* 62.40 euro cents, from 62.29 euro cents
* 54.73 British pence, from 54.92 pence
* 107.08 NZ cents, from 107.87 cents
The spot price of gold in Sydney at 1200 AEST was $US1,311.00 per fine ounce, from $US1,318.25 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.75 per cent May 2021, 2.1799pct, from 2.1803pct on Monday
* CGS 2.25pct May 2028, 2.7576pct, from 2.7703pct
Sydney Futures Exchange prices:
* June 2018 10-year bond futures contract was 97.23 (implying a yield of 2.77pct), from 97.215 (2.785pct) on Monday
* June 2018 3-year bond futures contract was 97.78 (2.22pct), unchanged from the previous local close
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)