Rising bank stocks drove a late surge on the ASX on Wednesday after Westpac announced a hike in mortgage rates, adding to earlier gains from easing global trade tensions.
The benchmark S&P/ASX200 index was 47.5 points, or 0.75 per cent, higher at 6,352.2 points at 1615 AEST, while the broader All Ordinaries index was up 43.4 points, or 0.68 per cent, at 6,457.0 points.
In futures trading the SPI200 futures index was up 52 points, or 0.83 per cent, at 6,328 points.
Westpac announced late on Wednesday that it will raise its variable home loan rates by 14 basis points from September 19 to cope with an increase in its borrowing costs.
St George Bank, owned by Westpac, announced an increase of the same magnitude.
Westpac’s move sparked an immediate rise in the the banking sector and a sharp fall in the Aussie dollar.
Westpac led gains, up 2.7 per cent to $28.88, ANZ lifted 2.3 per cent to $29.43, Commonwealth Bank rose 2.1 per cent to $73.23 and NAB added 1.8 per cent to $28.48.
The Australian dollar was at 73.03 US cents at 1700 AEST, down from 73.45 US cents on Tuesday.
Westpac senior currency strategist Sean Callow said the drop in the Aussie dollar was likely driven by investors worried that a retail bank rate hike could sway the Reserve Bank of Australia away from its recent indications that the next move in official interest rates will be up.
“The markets are pricing in a slight increase in the risk of the RBA either delaying rate hikes yet further or, more radically, cutting rates,” Mr Callow said.
The local market had already been in positive territory ahead of Westpac’s hike announcement, with material stocks supported by a rise in most commodity prices as a new US-Mexico trade deal raised hopes for an agreement between the United States and China.
The US and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), pressuring Canada to sign up to new auto trade and dispute settlement rules to remain part of the three-way pact.
US stocks rose for a third consecutive session on Wall Street on Tuesday.
In local companies news, Boral soared 65 cents, or 10.1 per cent, to $7.07 after it lifted its full-year profit by nearly 50 per cent to $441 million, boosted by a strong construction market in Australia and its Headwaters acquisition in the US.
Infant formula maker Bellamy’s jumped 83 cents, or 7.5 per cent, to $11.96 as it posted a $43.3 million profit for 2017/18 after suffering a loss a year earlier.
ON THE ASX:
* The benchmark S&P/ASX200 was up 47.5 points, or 0.75 per cent, to 6,352.2 points
* The All Ordinaries was 43.4 points, or 0.68 per cent, higher at 6,457.0 points
* In futures trading the SPI200 futures index was up 61 points, or 0.97 per cent, to 6,337 points at 1630 AEST
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 73.03 US cents, from 73.45 US cents on Tuesday
* 81.24 Japanese yen, from 81.65
* 62.57 euro cents, from 62.84
* 56.8 British pence, from 57
* 109.07 NZ cents, from 1.098
The spot price of gold in Sydney at 1700 AEST was $US1,203.16 per fine ounce, down from $US1,211.72 per fine ounce on Tuesday.