THE sharemarket finished firmer as investors sought high-yielding bank stocks following Tuesday's cut in the cash rate.
At the close, the benchmark S&P/ASX 200 Index was up 16.8 points, or 0.37 per cent, at 4520.4.
RBS Morgans private client adviser Bruce Smith said the market improved, thanks to the banking sector, which closed about 1 per cent higher. "Our market was dragged up by the banks, Suncorp and the likes of Rio Tinto," Mr Smith said. "It follows [Tuesday's] rate cut, as people look to high-yielding banking stocks."
Traders paid little attention to national accounts data showing Australia's economy grew by 0.5 per cent in the September quarter, which was slightly below expectations.
Commonwealth Bank, Westpac and NAB on Wednesday passed on only 20 basis points of the full 25-basis-point RBA cut to the cash rate. ANZ will announce its interest rate decision on December 14.
Commonwealth Bank shares climbed 58? to $61.08, Westpac was up 16? at $25.58, National Australia Bank put on 6? to $24.31 and ANZ added 18? to $24.77. Bancassurer Suncorp finished 23? higher at $9.97.
BHP Billiton added 3? to $34.29 and Rio Tinto rose 94? to 59.35.
The good news for Rio came after freight rail operator Aurizon, formerly known as QR National, extended a Queensland coal haulage contract.
Aurizon, which was up 6? at $3.63, will transport up to 12 million tonnes of coal a year from Rio Tinto's Clermont mine to the Dalrymple Bay coal terminal in Queensland for 10 years from next July.
Ten Network shares have gone into a trading halt - having last traded at 32.5? - as the struggling free-to-air television broadcaster prepared to raise new funds.
Sundance Resources shares fell 11.5 per cent, or 4.5?, to 34.5? after suitor Hanlong Mining delayed a takeover deal this week.
National turnover was 1.89 billion securities worth $3.6 billion.
The dollar was trading higher at $US104.74?, up from $US104.38?.
Meanwhile, bond futures prices were steady after national accounts data showed economic growth had slowed.
JPMorgan interest rate strategist Sally Auld said the market was waiting for developments in negotiations between US politicians trying to avoid the fiscal cliff of tax rises and spending cuts due to apply automatically next year.
"I think everyone's focus is really on the fiscal cliff and the probability of whether that gets resolved or not as we head towards Christmas," she said.
The December 10-year bond futures contract was at 96.900, and the three-year contract was at 97.380, both unchanged.
Frequently Asked Questions about this Article…
Why did the ASX 200 finish firmer on the day and what was the market move?
The S&P/ASX 200 closed higher as investors rotated into high‑yielding bank stocks following the RBA's recent 25 basis‑point cash rate cut. The index was up 16.8 points, or 0.37%, finishing at 4520.4, with the banking sector and stocks like Suncorp and Rio Tinto helping to lift the market.
How did Australia's big banks respond to the RBA's 25 basis‑point rate cut?
According to the report, Commonwealth Bank, Westpac and NAB passed on only 20 basis points of the full 25 basis‑point RBA cut to customers. ANZ had not yet announced its decision at the time and was scheduled to do so on December 14.
Which major bank share prices moved and what were their reported prices?
The article reported the following closing prices on the day: Commonwealth Bank at $61.08, Westpac at $25.58, National Australia Bank at $24.31, ANZ at $24.77, and bancassurer Suncorp at $9.97.
How did resource stocks like Rio Tinto and BHP perform and what drove Rio Tinto's move?
BHP Billiton was reported to have added to close at $34.29, while Rio Tinto rose to $59.35. Rio Tinto's gain was linked to good news that freight rail operator Aurizon extended a Queensland coal haulage contract involving Rio Tinto’s Clermont mine.
What was the Aurizon contract with Rio Tinto and how did markets react?
Aurizon extended a Queensland coal haulage contract to transport up to 12 million tonnes a year from Rio Tinto’s Clermont mine to the Dalrymple Bay coal terminal for 10 years starting next July. The contract was cited as positive news for Rio Tinto, and Aurizon shares were reported up at $3.63.
Why did Ten Network go into a trading halt and what was its last reported price?
The struggling free‑to‑air broadcaster Ten Network entered a trading halt as it prepared to raise new funds. The article noted the stock had last traded at 32.5 (as reported).
What happened with Sundance Resources and the Hanlong Mining takeover proposal?
Sundance Resources shares fell after suitor Hanlong Mining delayed a takeover deal. The article reported that Sundance shares fell 11.5% following the delay.
How did national accounts, bond futures and global risks like the US fiscal cliff affect market sentiment?
National accounts showed Australia’s economy grew by 0.5% in the September quarter, slightly below expectations, but traders largely focused on other drivers. Bond futures were steady after the data (December 10‑year futures at 96.900 and three‑year at 97.380 unchanged). JPMorgan strategist Sally Auld said markets were watching US political negotiations over the 'fiscal cliff', and the Australian dollar was trading higher (reported at US104.74¢).
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