Banks lift Australian shares higher

A STRONG rally among the big four banks and a positive Wall Street session overnight have led the Australian share market higher on Friday.

US stocks closed higher after global equity markets rose.

A STRONG rally among the big four banks and a positive Wall Street session overnight have led the Australian share market higher on Friday.

US stocks closed higher after global equity markets rose on reduced expectations of a US Federal Reserve rate hike this year following a stream of mediocre US economic reports, including Thursday’s weak consumer prices data.

The positive overseas lead and growing expectations of a local interest rate cut have given Aussie shares a major boost, optionsXpress market analyst Ben Le Brun said.

“Certain sections of the analytical community are calling for a rate cut in November after Westpac increased its variable home rate and this should be a positive driver for the high yielding stocks,” he said.

“And that’s possibly why we are seeing the banks and the telcos doing so well this morning.” National Australia Bank was up 30 points, or 0.95 per cent, at 31.82, Commonwealth Bank gained $1.02, or 1.35 per cent, to $76.42 and ANZ rose 14 cents, or 0.49 per cent, to $28.70 at 1025 AEDT. Westpac shares have been halted from trade after that bank announced its latest capital raising.

Telstra was up 3.5 cents, or 3.5 per cent, at $5.475.

The major miners are weighing on the market as the drop in iron ore prices overnight overshadow Rio Tinto’s upbeat production report.

Rio Tinto’s iron ore shipments are up 17 per cent on last year, as the miner completed the expansion of its Pilbara infrastructure. Its shares was up one cent at $54.26, while BHP Billiton was down 21.5 cents at $24.905.

Pure iron ore miner Fortescue Metals is holding up well, rising 10 cents to $2.39.

KEY FACTS

* At 1025 AEDT on Thursday, the benchmark S&P/ASX200 index was up 38.9 points, or 0.74 per cent, at 5,268.9 points.

* The broader All Ordinaries index was up 39.2 points, or 0.74 per cent, at 5,304.8 points.

* The December share price index futures contract was up 47 points at 5,254 points, with 7,940 contracts traded.

* National turnover was 281 million securities worth $390 million.