Banks and miners give a boost to local bourse

The banks and major miners have driven the ASX higher, following a strong lead from offshore equity and commodity markets.

A pedestrian is reflected in the window of the Australian Securities Exchange. (AFP/Peter Parks)

The sharemarket rose on Tuesday as concerns over the global economic impact of Hurricane Irma eased, while the Australian dollar fell amid a mixed read on domestic business.

At the close, the S&P/ASX200 index rose 0.6 per cent, or 35.7 points to 5748.8, while the broader All Ordinaries index also rose 0.6 per cent, or 33.9 points to 5809.

The market response to Hurricane Irma’s landfall on the United States mainland appeared to show that heightened expectations of lasting economic impact were overly cautious, with local investors served a strong lead by offshore equity and commodity markets.

“An improved tone for industrial metals overnight and relief over Hurricane Irma have seen support for the major miners,” said CMC chief market analyst Ric Spooner.

“Bank stocks on the other hand have been under pressure for some weeks, suggesting potential for a more sustained rally which could see the ASX 200 index approaching the top of its trading range in the 5800/5830 range before long.”

CBA shot over 2.2 per cent higher to $75.92, Westpac rose 1 per cent to $31.85, ANZ added 1.4 per cent to $29.90 while NAB shares ticked 0.8 per cent higher to $30.76.

BHP Billiton rose 1.2 per cent to $27.12, Rio Tinto lifted 1.9 per cent to $68.80 and Fortescue Metals jumped 1.6 per cent higher amid what continues to be a volatile time for resource stocks and underlying commodities, according to Mr Spooner.

“Despite today’s rally, the severity of the recent sell off in copper and mining stocks is symptomatic of a frothy situation where markets remain vulnerable to more profit taking,” he said.

Shares in QBE lifted 2.45 per cent after chief executive John Neal announced his resignation in the wake of a boardroom scandal earlier this year, while Galaxy Resources surged 11.8 per cent after a director with shared tenure on the board of rival Mineral Resource resigned.

AGL fell 1.49 per cent after its accord with the Federal government over the Liddell power station failed to ease relations, while Ardent Leisure lifted after it announced the CEO of its US-based business Main Event will step down.

In economic data, business confidence fell below its long run average and conditions rose to a fresh nine-year high in August, according to NAB’s monthly survey.

The read on sentiment fell to 5 points from 12 points the month before, while conditions rose to 15 points from 14 points on the same basis.

“It is possible that external shocks, such as escalating tensions with North Korea, contributed to the decline,” said NAB chief economist Alan Oyster.

“[However,] new information from the survey indicates that customer demand, margin squeeze, government policy are having the greatest influence on confidence at present.”

The Australian dollar fell on the release of the survey to sit 0.4 per cent lower, but swung into the black by the closing bell to trade 0.1 per cent, or US0.11 cents higher at US80.40 cents.