Australia Shares Nudge Higher, Supported by Banks

   By Robb M. Stewart 
 

MELBOURNE, Australia--Australian equities logged a third straight daily gain on Tuesday, edging marginally higher thanks to buying of bank shares.

The local market got off to a sluggish start after the Dow Jones Industrial Average edged higher to a fresh record and the Nasdaq Composite Index breached 4000 for the first time in 13 years but failed to hold the level. Momentum built up in the afternoon was lost in the final few minutes of trading, with mining and industrial shares, in particular, falling.

"Following uninspiring leads offshore, Australian equities operated in much of the same vein," said Betty Lam, sales trader at CMC Markets in Sydney, adding trading volumes for the day were fairly thin.

There was little major corporate news or economic data for investors to latch on to, although the Australian dollar did pick up after Phillip Lowe, deputy governor of the Reserve Bank of Australia, dampened speculation that exchange rate intervention might be imminent.

The benchmark S&P/ASX 200 finished up almost 0.1% at 5357, having been as high as 5357.1 earlier in the day.

High-yielding banks were stronger, with Australia & New Zealand Banking, Commonwealth Bank, National Australia Bank and Westpac, between 0.5% and 0.9% higher for the day.

"Time and time again we see local investors taking advantage of any price pullbacks in the major banks and topping up, so to speak," said Stan Shamu, market strategist at IG in Melbourne.

Mr. Shamu said some major resources shares, however, prevented the wider market from extending gains.

Santos rose 0.6%, Aurora Oil & Gas climbed 1.4% and Oil Search advanced 1% in a recovery from declines a day earlier.

But big mining companies lost ground, with BHP Billiton closing 0.2% in the red, Rio Tinto falling 0.6% and fellow iron-ore producer Fortescue Metals Group dropping 1.4%. Gold producer Newcrest Mining fell 1.9%, adding to Monday's 2.8% drop.

The Australian dollar rose to about US$0.92 after Reserve Bank of Australia's Philip Lowe said the threshold for the central bank intervening in the foreign exchange market was fairly high and was trading at US$0.9194 late. The currency had fallen more than three U.S. cents since RBA Governor Glenn Stevens last Thursday said the bank was "open-minded" about the prospect of intervention.

Write to Robb M. Stewart at [e-mail]