The Australian share market has closed higher, buoyed by the banks and commodity-related stocks, but the Aussie dollar has fallen below 71 US cents for the first time since February 2016.
The benchmark S&P/ASX200 index was up 30.2 points, or 0.49 per cent, to 6176.3 points on Thursday, while the broader All Ordinaries index was 28.6 points, or 0.46 per cent, higher at 6293.8 points.
The Australian dollar was buying 70.83 US cents at 1630 AEST, down from 71.81 US cents on Wednesday.
CommSec market analyst James Tao said the combination of rising interest rates in the US and expectations the Reserve Bank of Australia will leave the cash rate at a record low for another year has devalued the Aussie dollar.
The week-long public holiday in China has also compounded the shrinking local currency.
“There’s not too much from Asia to really push the Aussie dollar higher, which we’re obviously very reliant on,” Mr Tao said.
The declining Aussie dollar does, however, make local shares more attractive to foreign investors and contributes to the strength of the market’s indices, he said.
Rising oil prices pushed energy stocks higher with Origin Energy, Oil Search Limited and Santos all up more than one per cent.
The banks also lifted, taking a lead from the US where strong economic data fuelled a rise in Treasury yields and lifted financial stocks.
NAB had the smallest gain, up 0.2 per cent to $27.25, and Westpac the strongest, up 0.9 per cent to $27.39.
Bank of Queensland was up 2.2 per cent to $11.01 after the regional lender reported a slip in profit but a reduction in faulty loans.
Soaring aluminium prices, following the closure of Norsk Hydro’s Alunorte refinery in Brazil, helped lift South32 shares by 7.3 per cent to $4.25, but a dip in the gold price has seen Northern Star, Evolution, and Newcrest Mining retrace yesterday’s gains.
Gold stocks dropped after news the Italian government appears to have softened its populist stance on its budget deficit and debt, soothing investors’ nerves and sparking a move back to other higher-risk assets.
Copper prices fell overnight, too, but shares in mining giant BHP were up 0.9 per cent after it predicted China’s overseas expansion would boost copper use by 1.6 million tonnes, or roughly seven per cent of annual demand.
Meanwhile, Australia’s trade surplus rose four per cent to $1.6 billion for August, despite falling export revenue from mining exports, with the export of meat, wool, beverages and gold contributing to the overall rise.
ON THE ASX:
* The S&P/ASX200 was up 30.2 points, or 0.49 per cent, to 6176.3 points
* The All Ordinaries was 28.6 points, or 0.46 per cent, higher at 6293.8 points
* In futures trading the SPI200 futures index was up 35 points, or 0.57 per cent, at 6178.0 points at 1630 AEST.
CURRENCY SNAPSHOT AT 1630 AEST:
One Australian dollar buys:
* 70.83 US cents, from 71.81 US cents on Wednesday.
* 80.99 Japanese yen, from 81.70
* 61.70 euro cents, from 62.01
* 54.72 British pence, from 55.22
* 109.11 NZ cents, from 109.12
The spot price of gold in Sydney at 1630 AEST was $US1197.76 per fine ounce, from $US1203.68 on Wednesday.