Australia Shares Shrug Off Caution to Rally Higher

   By Robb M. Stewart 
 

MELBOURNE--Australian shares bounced back from recent declines with a rally that put the market at odds with weakness in much of Asia Wednesday, buoyed by energy companies and retailers.

"The talking point on the floor today has been firmly around the outperformance of the Australian market," said Chris Weston, chief market strategist at IG in Melbourne.

A weaker lead from U.S. markets overnight weighed on most Asian markets as investors continue to fret about when the Federal Reserve will start to withdraw stimulus measures and the risk that lawmakers won't be able to agree a budget deal to prevent a government shutdown next week.

In contrast, Australian equities showed broad-based gains.

The S&P/ASX 200 finished 0.8% higher at 5275.9, in sight of the five-year high of 5300.1 hit during trading last Thursday. The market had declined the previous three days.

Australia's neighbor across the Tasman Sea also pushed higher, with New Zealand's NZX-50 closing up 1.2% at 4764.723, boosted by retailer Kathmandu, following solid earnings results.

Mr. Weston said there was no clear trigger for the ASX's rally, although upmarket retailer David Jones pleased investors with earnings that showed improved momentum in the second half of the year. Consumer confidence has been relatively subdued despite a series of interest-rate cuts, and investors are looking for signs that spending will pick up at the end of the year.

David Jones ended the day up 4.9%, while rival retailer Myer rose 0.8%.

The country's biggest banks resumed their run higher, with National Australia Bank shares rising 2% to their highest level since early 2008. ANZ climbed 1.4% and Westpac rose 1.1%.

Mr. Weston said that falling real interest rates, with the Australian 10-year bond declining two basis points to 3.87%, may have contributed to the lift in high-yielding banks.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, said five days of oil price falls had some local traders speculating on a bounce, helping energy shares such as Santos, which rose 1.5%, and Woodside Petroleum, which gained 0.7%.

Australian gold producers also advanced, lifted by a modest rise in the bullion price. Evolution Mining ended up 6.7% and Kingrose Mining gained 6.4%. Larger Newcrest Mining added 0.3%.

Market heavyweight BHP Billiton climbed 0.4% and fellow miners Rio Tinto rose 0.5% and Fortescue Metals advanced 3%.

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

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