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Aussie shares open 1.5% higher on renewed hopes of US stimulus

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The Australian share market has opened higher on renewed hopes that the US Federal Reserve would announce stimulus measures at its next meeting.

At 1018 AEST on Monday, the benchmark S&P/ASX200 index was up 62.7 points, or 1.49 per cent, at 4,284.2, while the broader All Ordinaries index was up 61.1 points, or 1.44 per cent, at 4,304.1

On the ASX 24, the September share price index futures contract was up 60 points at 4,245, with 11,434 contracts traded.

US stocks surged, boosted by the Labor Department’s July labour report showing stronger-than-expected jobs growth and a slight increase in the services sector activity.

The Dow Jones Industrial Average finished at 13,096.17, up a hefty 217.29 points (1.69 per cent).

European stocks closed higher, rebounding strongly from the previous day’s heavy losses, with London’s benchmark FTSE 100 index of top companies up 2.21 per cent at 5,787.28 points.

IG Markets analyst Cameron Peacock said the Australian market had followed strong leads from Wall Street and European markets and opened positively.

“Obviously we had a good finish to US and European weeks,” he said.

“We had a better than expected jobs creation in the US, but we saw the unemployment rate tick up to 8.3 per cent, so that kept alive the hope that the Fed would step in and do something next month at their mid September meeting.”

In economic news on Monday, the TD Securities-Melbourne Institute inflation gauge for July is due out, along with ANZ job advertisements series for July and the Dun and Bradstreet business expectations survey.

In equities news, Argo Investments is due to post full year results.

Shares in Fortescue Metals opened 16 cents, or 3.83 per cent, higher at $4.34 after the miner announced it has secured $US1.5 billion ($A1.44 billion) in new funding for the expansion of its flagship iron ore operations in Western Australia’s Pilbara region.

BHP Billiton was 87 cents, or 2.78 per cent higher, at $32.17 and Rio Tinto gained $1.85, or 3.56 per cent, to $53.86.

The four major banks all opened higher.

ANZ was up 28 cents to $23.62, National Australia Bank was 26.5 cents higher at $25.25, Westpac gained 24 cents to $23.54 and Commonwealth Bank was up 70 cents to $56.68.

National turnover was 210 million shares worth $356 million, with 436 up, 91 down and 220 unchanged.