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Australian stocks open flat as US market rises

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The Australian market has opened flat as investors gave a lukewarm response to US Congressional Republicans agreeing to temporarily raise the debt ceiling.

At 1015 AEDT on Monday, the benchmark S&P/ASX200 index was up 5.7 points, or 0.12 per cent, at 4,776.9 and the broader All Ordinaries index had added 6.1 points, or 0.13 per cent, to 4,800.8.

On the ASX 24, the March share price index futures contract was up four points at 4,744 with 4,234 contracts traded.

The Australian market had been expected to start the session stronger, after the US S&P 500 and the Dow Jones Industrial Average hit their best levels since December 2007 during Friday night trade.

This followed news that Congressional Republicans in the US had planned to vote for the debt ceiling to be extended for three months as President Barack Obama sorts out the budget and a long-term strategy for government spending cuts.

But the Australian market reaction was mixed, with two of the big four banks going backwards.

CommSec chief economist Craig James said Australian investors saw the US Republicans as delaying a tough decision, rather than solving the debt crisis.

“It’s just an example of the US kicking the can down the road,” he told AAP.

“It doesn’t solve the situation but it takes away negativity.”

With US markets closed on Monday night Australian time for the Martin Luther King, Jr Day public holiday, Mr James said the local market was likely to trade within a tight range on Monday.

“We’re going up the stairs rather than the escalator,” he said.

“It means we don’t suffer the potential for a correction.”

Australian banking stocks were mixed on the US debt ceiling developments, with the Commonwealth Bank shedding 47 cents to hit $61.99 at 1037 AEDT.

Westpac lost seven cents to touch $26.52.

But ANZ gained 2.5 cents to $25.61 while NAB put on 42 cents to $26.76.

The Dow Jones Industrial Average finished up 53.68 points, or 0.39 per cent, to 13,649.70, reaching its highest close since December 10, 2007.

The broader S&P 500 added 5.04, or 0.34 percent, to hit 1,485.98, its highest since December 26, 2007.

National turnover was 234.4 million shares worth $232.6 million, with 336 stocks up, 215 down and 287 unchanged.