Stocks storm home at the end of a volatile week

Solid gains among the banks and miners have offset a mixed showing from retailers to drive the bourse 1pc higher.

A pedestrian is reflected in the window of the Australian Securities Exchange (ASX) showing stocks gains during opening trading in Sydney on November 10, 2016. Australian stocks surged 2.85 per cent at the open on the back of a rally in commodities with investors betting US president-elect Donald Trump will pursue business-friendly policies. / AFP PHOTO / PETER PARKS

The local sharemarket closed the session more than 1 per cent higher with strong gains across most sectors.

It follows a robust lead from Wall Street after a budget resolution, a potential tax overhaul precursor, passed the House of Representatives.

The benchmark S&P/ASX200 rose 58.9 points, or 1.04 per cent, to 5,710.7 points, while the broader All Ordinaries index lifted 57.1 points, or one per cent, to 5,777.4 points.

Commonwealth Bank closed 1.3 per cent higher at $76.30. It came after chief executive Ian Narev assured shareholders that the bank is focused on “putting things right” amid claims it breached of anti-money laundering laws.

In other financials, Westpac rose 1.3 per cent to $32.14 and ANZ lifted 1.3 per cent, closing at $29.48. NAB also gained 1.3 per cent to $31.34.

“I think the banks have had a relatively volatile week which is sort of in line with what the market has been doing,” said Craig Sidney of Shaw and Partners.

“It has been a volatile week and I think earlier in week you probably saw a bit of offshore selling across that banking sector as more money moved into other regions within Asia.”

BHP strengthened 2 per cent to $26.61 at the close. Rio Tinto lifted 1.9 per cent to $69.25 and Fortescue added 0.4 per cent to $5.17.

In the retail sector, JB HI-FI shed 0.9 per cent to $22.61 and Myer slumped 1.3 per cent to $0.75.

Breville edged up 0.6 per cent to $11.29 and Harvey Norman rose 1.1 per cent to $3.86.

Citibank analysts Tony Brennan and Mark Tomlins said investors may be looking to investments with more growth opportunity in the wake of the bank levy and energy market intervention.

“Reduced inflows from both foreign investors and super funds, which combined are estimated to hold close to three-quarters of the market, were recorded over the first half of the year, albeit after strong inflows last year,” they said in research to investors.

“For foreigners, stronger global growth has made other markets attractive, particularly in the region, and data on flows from US investors show a lift in allocations to foreign equities, both developed and emerging.

“Perceived sovereign risk in Australia after the bank levy and energy market intervention may have also put investors off.”

Cabcharge closed just off its all-time low at $1.80 after Macquarie cut its FY18 revenue forecast by 11 per cent.

Meanwhile, the Australian dollar dropped sharply after RBA board member Ian Harper refused to rule out rate cuts.

“The thing that is causing an issue for us (the RBA board) is slow growth in wages, which is feeding into slow growth in household income,” Professor Harper said in an interview with The Wall Street Journal. “If you start to lose that momentum, that might be the basis of some sort of policy action.”

The local currency traded 0.5 per cent lower at US78.28 cents at 4.42pm (AEDT).