The Australian share market has staged an end-of-week recovery as investors rekindle their belief that US President Donald Trump will be able to address the issue of tax cuts regardless of the outcome of his efforts to repeal Obamacare.
OptionsXpress market analyst Ben Le Brun said the local bourse had had a pretty good day on Friday despite negative leads from Wall Street.
“We seemed to be optimistic straight of the gate,” Mr Le Brun said.
“Then an hour into trade we learned that President Trump’s next port of call, regardless of how the Obamacare vote goes, is going to be corporate tax cuts in America.
“And that is one of the big reasons why the market has been in such an optimistic mood for the last three or for months – so that was the spur-on that we needed.”
President Trump’s budget director, Mick Mulvaney, on Thursday night (in the US) indicated that President Trump wants a make-or-break vote in the US Congress on legislation to repeal Obamacare.
The recovery on Friday won back much of the territory ceded on Wednesday, when fears Mr Trump’s policy agenda was failing hit US markets and flowed on to Australia, taking 1.6 per cent off the benchmark index.
Mr Le Brun said the financial, healthcare, telecommunications and consumer staples sectors all benefited.
All four big banks – ANZ, Westpac, Commonwealth Bank and National Australia Bank – were higher, with ANZ leading the way – up 1.92 per cent to $31.36.
ANZ said on Friday that it is raising its variable rates for investor and interest-only mortgages, but will not increase lending costs for residential borrowers with standard principal and interest loans.
In the resources sector, global miner BHP Billiton rose 0.29 per cent to $24.26, Rio Tinto added 0.18 per cent at $60.11, and iron ore miner Fortescue Metals was steady at $6.26.
Fortescue is capitalising on continuing strong prices to pay off another $US1 billion ($A1.3 billion) of debt.
Infrastructure and mining services company Downer EDI plunged 20.7 per cent to $5.55 after institutional investors showed limited enthusiasm for an entitlement offer to help fund Downer’s $1.26 billion takeover of cleaning and catering firm Spotless Group.
Slater and Gordon climbed 13.6 per cent to 12.5 cents, after the embattled law firm said the corporate watchdog had reviewed its financial records and found no evidence it had breached the law.
Meanwhile, the Australian dollar was trading at 76.19 US cents at 1700 AEDT, down from 76.63 US cents at the close on Thursday and well below the 77 US cent level where it began the week.
AxiTrader chief market strategist Greg McKenna said currency traders believed that the Aussie dollar may have already benefited as much as it could from higher prices for iron ore and base metals.
ON THE ASX:
* The benchmark S&P/ASX200 was up 45.5 points, or 0.8 per cent, at 5,753.5 points.
* The broader All Ordinaries index was up 42.1 points, or 0.73 per cent at 5,796.1 points.
* The June SPI200 futures contract was up 41 points, or 0.72 per cent, at 5,748 points at 1630 AEDT..
* National turnover was 2.3 billion securities traded worth $5.1 billion.
CURRENCY SNAPSHOT AT 1700 AEDT:
One Australian dollar buys:
* 76.19 US cents, from 76.63 on Thursday
* 84.929 Japanese yen, from 85.36 yen
* 70.76 euro cents, from 71.02 cents
* 61.04 British pence, from 61.37 pence
* 108.76 New Zealand cents, from 108.73 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEDT was $US1,242.40 per fine ounce, down $US3.50 from $US1,245.90 per fine ounce on Thursday.
BOND SNAPSHOT AT 1630 AEDT:
* CGS 5.25 per cent March 2019, 1.7564pct, down from 1.766pct on Thursday
* CGS 4.25pct April 2026, 2.6938pct, up from 2.688pct
Sydney Futures Exchange prices:
* June 2017 10-year bond futures contract at 97.210 (implying a yield of 2.790pct), down from 97.215 (2.785pct) on Thursday
* June 2017 3-year bond futures contract at 98.000 (2.000pct), up from 97.990 (2.010pct).
(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)
