Australian share market climbs on federal budget stimulus hopes

Aussie stocks gained momentum towards the end of the trading day amid hopes the federal budget will deliver much-needed stimulus to the ailing economy.

The Australian share market spent much of the day in negative territory but clawed into the green towards the end as investors hoped for substantial stimulus measures in the federal budget.

The S&P/ASX200 closed 0.35 per cent higher at 5962.1 while the All Ordinaries Index added 0.47 per cent to 6164.2.

ThinkMarkets analyst Carl Capolingua said there were plenty of things that could have moved the market, but it ended up being a relatively quiet session, “which is a welcome change from the crazy volatility we’ve had over the last couple of weeks”.

“The fact we’ve consolidated Monday’s 2.6 per cent gain is a major positive in my opinion. We’ve now got a solid base from which we can hopefully push higher,” he said.

“We’ve seen some solid buying into the close of the session today.

“I think this is a direct result of positioning ahead of the budget. Our feeling is that the budget will surprise to the upside in terms of support that will hit consumers, and therefore companies’ bottom lines pretty quickly.”

In company news, two of WA’s biggest gold miners Northern Star and Saracen, which jointly own the massive Super Pit mine, announced a merger to create a $16 billion giant that will become Australia’s second biggest producer of the precious metal behind Newcrest.

The Super Pit gold mine in Kalgoorlie is the centrepiece of a large portfolio of assets joint owners Northern Star and Saracen plan to combine in a “merger of equals”. Picture: KCGM

Northern Star shares leapt 10.6 per cent to $15.29 while Saracen jumped 9.5 per cent to $5.72.

“We’ve been telling clients to expect consolidation in the gold sector for some time, and we’ve got buy notes on both stocks, so we’re pleased with the news,” Mr Capolingua said.

“It’s a major tie up.”

Other gold miners also rose, with Westgold up 7.08 per cent to $2.57 and Silver Lake putting on 6.09 per cent to $2.44.

But Newcrest, which received conditional approval to list on the Toronto Stock Exchange on October 13, backtracked 0.22 per cent to $31.06.

BHP rose 0.39 per cent to $36.28, Rio Tinto gained 0.33 per cent to $96.02 and Fortescue climbed 1.7 per cent to $16.74.

Energy stocks performed well after a bounce in the oil price overnight, with Oil Search up 2.95 per cent to $2.79, Origin 1.8 per cent stronger at $4.47, Santos adding 3.48 per cent to $5.06 and Woodside appreciating 2.2 per cent to $18.

The big four banks were firmer, with ANZ up 0.5 per cent to $17.89, Commonwealth Bank inching 0.24 per cent higher to $66.15, National Australia Bank appreciating 0.27 per cent to $18.24 and Westpac improving 0.69 per cent to $17.41.

The Aussie dollar was fetching 71.72 US cents, 55.21 British pence and 60.82 Euro cents in afternoon trade.