The Australian share market has had its biggest day in 26 months as investors breathed a sigh of relief the financial services royal commission hadn’t recommended harsher penalties for the big banks.
The benchmark S&P/ASX200 index closed up 114.7 points, or 1.95 per cent, to 6,005.9 at 1615 AEDT on Tuesday, while the broader All Ordinaries was up 105.1 points, or 1.76 per cent, at 6,068.1.
The rally was the biggest since November 10, 2016, when the ASX200 closed up 3.34 per cent.
Tuesday’s close is also the bourse’s highest level in four months, since October 11.
The big banks led the way, with Westpac surging 7.36 per cent, to $26.70; ANZ up 6.5 per cent, to $26.86; CBA up 4.69 per cent, to $73.60; and NAB up 3.91 per cent, to $24.97.
CommSec market analyst James Tao said the market was relieved to know what banking royal commissioner Kenneth Hayne was recommending.
“Even though they were quite harsh and scathing on the deficiencies and culture of the banks and the financial sector as a whole, they didn’t come out with anything as to breaking up the banks.
“It definitely has been a solid session, the gains have been across the board.”
One exception was mortgage brokers, which had their shares hammered after the government proposed banning trailing commissions and reviewing broker renumeration in response to the commission’s report.
Mortgage Choice closed down 25.24 per cent and AFG closed down 29.13 per cent. Mortgage Choice stocks are down nearly 70 per cent from a year ago.
AMP shares were up 22 cents, or 9.95 per cent, to $2.43, but Australia’s largest wealth manager has still lost more than half its value since the royal commission highlighted conflicts of interest in its business model.
AMP said a raft of changes have already implemented and it was determined to win back the trust of its clients, shareholders and regulators.
While all eyes were on the financial sector, the reporting season did kick off on Tuesday, with industrial building materials company James Hardie shares jumping 5.62 per cent, to $15.98, after it reported profits had decreased by 10 per cent for the quarter amid a soft housing market.
Global education services provider Navitas shares were down 3 cents, or 0.53 per cent, to $5.60 after reporting its profit after tax was down 14 per cent, to $21.4 million.
Meanwhile the Aussie dollar jumped 0.5 per cent, to 72.61 US cents, following the Reserve Bank of Australia’s decision to leave interest rates steady.
ON THE ASX:
* The benchmark S&P/ASX200 index up 114.7 points, or 1.95 per cent, at 6,005.9 points at 1615 AEDT on Tuesday.
* The All Ordinaries was up 105.1 points, or 1.76 per cent, at 6,068.1.
* At 1630 AEDT, the SPI200 futures index was down 13 points, or 0.22 per cent, at 5,926.0.
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 72.61 US cents, from 72.26 US on Monday
* 79.77 Japanese yen, from 79.41
* 63.51 euro cents, from 63.19
* 55.69 British pence, from 55.43
* 105.25 NZ cents, from 104.95
The spot price of gold in Sydney at 1630 AEDT was $US1314.37 per fine ounce, from $US1312.06 on Monday.