SYDNEY, AAP – Investors gently pushed the ASX200 to more than 7500 points a day before the Reserve Bank explains whether the federal budget may affect inflation and the chance of higher rates.

The market closed a little more than 100 points from its record of August, helped by the heavyweight category of materials shares increasing by almost one per cent.

Financial shares lost less than half a per cent one day before Australia’s central bank announces its monthly rates decision.

Economists do not expect an increase from the record low cash rate of 0.1 per cent but are interested in how the RBA board will respond to the budget.

The budget halved the fuel excise for six months and gave plenty of cash handouts in an economy where annual inflation has increased to 3.5 per cent.

 

Top Australian Brokers

 

IG Markets analyst Kyle Rodda said high job vacancies and signs of strong price growth ahead could put pressure on the RBA to say a 2022 rate hike was more than plausible.

“The markets will be looking for explicit or implicit communication from the RBA at this meeting that it now believes rates could be increased this year,” he said.

The US central bank may this week also give clues on its plan.

The Federal Reserve hiked rates in March and investors will scour meeting minutes, due midweek, for estimates on the number and size of hikes to come this year.

Meanwhile European nations are discussing greater sanctions on Russia, which continues to wage war on Ukraine.

The conflict has jacked up commodity prices, particularly oil.

ASX commodity shares have benefited. Energy shares were less than one per cent higher in the latest trading day.

There were minor losses for financials, industrials and consumer shares.

The benchmark S&P/ASX200 index closed up 19.9 points, or 0.27 per cent, to 7513.7.

The All Ordinaries index closed higher by 33 points, or 0.42 per cent, to 7818.9.

The big market story of the day was fund manager Perpetual offering $2.4 billion for all the shares in rival Pendal.

The Pendal board will consider the offer, but said the value of asset managers may not currently reflect their potential due to the pandemic and geo-political instability.

The Perpetual bid is worth $6.23 per share.

Pendal ended higher by 18 per cent to $5.29.

Perpetual was down six per cent to $31.97.

Lender Pepper Money is buying 65 per cent of consumer finance broker Stratton Finance.

The $78 million buy will help Pepper Money distribute its services more widely and give better customer insight by sharing data between the businesses.

Pepper Money was up six per cent to $2.20.

Iluka Resources will go ahead with a fully integrated rare earths refinery in Western Australia.

The refinery will produce rare earth oxides used for electric cars, energy and electronics.

The capital cost is up to $1.2 billion and production is due to start in 2025.

Iluka was up six per cent to $12.22.

In mining, Fortescue was the best of the biggest players and rose three per cent to $21.70. BHP and Rio Tinto improved by less than half a per cent each.

The big banks were all lower by less than one per cent each.

The Australian dollar was buying 75.10 US cents at 1716 AEST, higher from 74.77 US cents at Friday’s close.

ON THE ASX

* The benchmark S&P/ASX200 index closed up 19.9 points, or 0.27 per cent, to 7513.7 on Monday.

* The All Ordinaries index closed higher by 33 points, or 0.42 per cent, to 7818.9.

* At 1716 AEST, the SPI200 futures index was down 11 points, or 0.15 per cent, at 7467 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 75.10 US cents, from 74.77 cents on Friday

* 92.05 Japanese yen, from 91.50 yen

* 68.05 Euro cents, from 67.62 cents

* 57.20 British pence, from 56.95 pence

* 108.29 NZ cents, from 108.11 cents.