Banks drive share market higher

Trevor Chappell
(Australian Associated Press)

The share market has closed higher for a fourth straight session, while the Australian dollar has fallen due to weaker-than-expected inflation numbers.

The market’s benchmark S&P/ASX200 index gained 0.7 per cent as investors caught up with recent gains on Wall Street.

The Australian dollar dropped more than a third of a US cent immediately after the release of March quarter inflation numbers at 1130 AEST, which showed a quarterly rate of 0.5 per cent, missing economists’ expectations of 0.6 per cent.

Core inflation, which is closely monitored by the Reserve Bank of Australia, was even weaker at an annual rate of 1.9 per cent, leaving room for another rate cut by the central bank, economists said.

The local currency was at 75.13 US cents at 1630 AEDT.

It was already under pressure over concerns about US President Donald Trump’s protectionism, after he applied tariffs to Canadian lumber entering North America.

CMC Markets chief market strategist Michael McCarthy said share market investors were catching up after Tuesday’s Anzac Day public holiday, following two consecutive days of strong gains on Wall Street.

“Clearly, we’re responding to a couple factors. No doubt, US company earnings have surprised on the upside over the last couple of sessions, and that’s been one of the boosts today,” Mr McCarthy said.

“But also, while we were on holiday, we did see rallies around the globe, so we’re playing a bit of catch up on the Australian market today.”

The inflation rate wasn’t strong enough to warrant a near-term lift in interest rates, and it wasn’t weak enough to cause immediate concerns about the state of the economy, meaning little impact for the share market, Mr McCarthy said.

The financial sector was a strong performer, including a gain of 1.3 per cent for ANZ,Macquarie Group added 2.6 per cent QBE Insurance was 2.1 per cent higher.

BHP Billiton added 0.6 per cent after cutting its full year copper production guidance and outlining plans to sell some of its US shale acreage.

Rio Tinto advanced 1.1 per cent and Fortescue Metals strengthened by 1.3 per cent.

A2 Milk surged 7.7 per cent after the milk producer forecast a 49 per cent jump in annual revenue thanks to better-than-expected infant formula sales in China and Australia.

Rival infant formula maker Bellamy’s was up 5.2 per cent.

ON THE ASX AT 1630 AEST:

* The benchmark S&P/ASX200 was up 40.2 points, or 0.68 per cent, at 5,912 points.

* The broader All Ordinaries index was up 36.1 points, or 0.61 per cent, at 5,936.8 points.

* The June SPI200 futures contract was up 24 points, or 0.41 per cent, at 5,898 points.

* National turnover was 2.04 billion securities traded worth $5.43 billion.

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