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Australian shares firm as banks, retailers rally

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Australian shares are marginally firmer as bargain hunters buy banking and retail stocks while resource companies falter in the wake of a Chinese slowdown.

Lonsec general manager of equities research Bill Keenan said stocks that stood to benefit from lower interest rates were being snapped up, a day after the market posted its biggest one-day loss in two months.

“There’s bargain hunting coming in,” he said.

“Clearly, stocks have come up off their intraday lows and it mainly seems to be yield orientation – banks and Telstra are pushing up.”

All the big banks were up, with ANZ adding 33 cents to $27.71, Commonwealth Bank rising 66 cents to $66.40, NAB gaining 32 cents to $29, and Westpac jumping 50 cents to $28.05.

The major retailers were also higher, with Woolworths adding 20 cents to $31.95 and Wesfarmers putting on 43 cents to $38.46 while Telstra gained four cents to $4.54.

But resources stocks are in trouble, after China’s National Bureau of Statistics revealed the economy is growing at an annual pace of 7.8 per cent, its lowest rate in 13 years.

BHP Billiton shed 33 cents, or 1.05 per cent, to $31.02, while diversified miner Rio Tinto fell 65 cents, or 1.26 per cent, to $50.89.

Newcrest shares have fallen to decade-long lows since $6 billion in writedowns were announced earlier this month, and were 16 cents weaker at $9.37.

The Chinese central bank has also ordered banks to strengthen liquidity management, which financial markets see as a sign there won’t be rate cuts.

“Whenever we see tightening credit conditions, it reminds us of the GFC (global financial crisis) period and everyone gets very nervous about that,” Mr Keenan said.

KEY FACTS

* At 1200 AEST on Tuesday, the benchmark S&P/ASX200 index was 17.7 points, or 0.38 per cent, higher at 4,686.8.

* The broader All Ordinaries index was up 11.1 points, or 0.24 per cent, at 4,662.2.

* The September share price index futures contract was 21 points higher at 4,654, with 18,496 contracts traded.

* National turnover was 634.8 million securities worth $1.66 billion.