The Australian share market opened higher, led by the big miners after the iron ore spot price surged almost four per cent.
At 1015 AEDT on Wednesday, the benchmark S&P/ASX200 index was up 14.1 points, or 0.3 per cent, at 4,4663.3, while the broader All Ordinaries index rose 14.5 points, or 0.31 per cent, at 4,4679.1.
On the ASX 24, the March share price index futures contract was up 22 points at 4,638 with 2,130 contracts traded.
IG Markets market strategist Stan Shamu said Australian shares are picking up a a positive lead from the Wall St on Monday, where an agreement on avoiding the fiscal cliff looked close.
“Unfortunately, there is still a little bit of uncertainty on some of the spending cuts and that is holding markets back from really extending those gains that we saw in US trade,” Mr Shamu said.
“It is a positive to start the new year with a bit of a gain but, unfortunately, it is not quite what everyone would have expected considering the big rally we saw on Wall Street.”
The White House and senior Republicans have struck the deal to avert a series of tax hikes and automatic spending cuts that could push the US back into recession – a situation called the fiscal cliff.
The bill has passed the Senate and is yet to be approved by the Republican-controlled House of Representatives.
Mr Shamu the market would be waiting to see what happened with the House vote.
He said the a rise in the iron ore prices is the main factor supporting Australian shares on Wednesday morning.
“Most of the gains are coming from materials, after the iron ore price spiked to $US144.90, so that is where the gains are mostly coming from,” he said.
“Apart from that we are just getting some of the defensives lagging the market, utilities and health care are both a touch weaker.”
Rio Tinto gained 77 cents, or 1.2 per cent, at $66.78, BHP Billiton was steady at 58.08 and iron-ore focused Fortescue Metals Group had put on eight cents, or 1.7 per cent, at $4.73.
Sundance Resources shares continued their rally that started on Monday after Chinese company Hanlong said it was in the final stages of taking over the Australian miner.
Its shares were up four per cent to 38.5 cents.
Volumes were low on the first trading day of the year with national turnover at 168.1 million securities worth $217.1 million, with 362 stocks rising, 154 down and 217 unchanged.
