Optimism federal budget will stimulate economy push Aussie shares higher

Optimism this week’s federal budget will contain strong measures to stimulate the economy pushed the Australian share market higher.

The Australian share market soared higher as investors pinned their hopes on the stimulus effect of this week’s federal budget.

The S&P/ASX200 finished 2.59 per cent higher at 5941.6 while the All Ordinaries Index jumped 2.54 per cent to 6135.1.

“The futures market was suggesting a gain of more than one per cent in opening trade - that’s been easily eclipsed,” CommSec analyst Tom Piotroswki said.

“This is clearly making up for the weaker result that we saw on Friday when the market fell by 1.4 per cent.

“The federal budget is a factor that looms large in investor thinking at the moment for a number of reasons, not least of which is the broad stimulatory effect that it is being touted as having on the Australian economy.”

Mr Piotroswki said financial stocks accounted for a lot of the market gains.

ANZ leapt 4.22 per cent to $17.80, Commonwealth Bank rose 3.56 per cent to $65.99, National Australia Bank appreciated 4 per cent to $18.19 and Westpac gained 4.35 per cent to $17.29.

Westpac was the best performer among the big four banks. Picture: William West/AFP

Energy stocks fared well, surprisingly, after the oil price retreated.

Oil Search was 7.5 per cent stronger at $2.71 while Woodside put on 4.8 per cent to $17.61.

Miners were also strong performers, with Rio Tinto up 2.2 per cent to $95.70, BHP adding 2.9 per cent to $36.14 and Fortescue firming 2.36 per cent to $16.46 but gold miner Newcrest dipped 0.5 per cent to $31.13.

Bunnings owner Wesfarmers was 1.5 per cent higher at $45.26, airline Qantas firmed 4.8 per cent to $4.31 and Telstra was up 2.17 per cent to $2.83.

“The big question is whether or not these improvements will be sustained over the course of the week, when there’s a lot to navigate, not least of which is the situation in the US President Donald Trump,” Mr Piotroswki said.

“That’s something to keep front of mind.”

The Aussie dollar was fetching 71.83 US cents, 55.51 British pence and 61.19 Euro cents in afternoon trade.