Banks drive up index before key US Fed meeting
The benchmark S&P/ASX 200 Index closed 34.1 points, or 0.71 per cent, higher at 4825.9.
The broader All Ordinaries Index was up 29.5 points, or 0.62 per cent, at 4805.
Options Xpress analyst Ben Le Brun said banking stocks sparked a terrific turnaround on Monday, pushing the market higher after losses earlier in the session.
"It looks like bargain hunters and traders are ready to take a position prior to the Fed's meeting," Mr Le Brun said.
Local investors are nervous before the US Federal Reserve's policy board meeting on Wednesday, amid speculation the Fed will soon wind back its third round of bond purchases, known as quantitative easing.
"Some traders are starting to question if and when that's going to happen," Mr Le Brun said.
"It might not be on the agenda for at least a couple more months and that's going to be very positive for risk assets across the board."
Investor appetite for higher-yielding banking and telco stocks has continued, and mining shares were sold off amid concerns about demand in China.
In the banking sector, ANZ gained 63¢, or 2.2 per cent, to $28.45, Westpac added 53¢, or 1.8 per cent, to $29.47, Commonwealth Bank lifted $1.37, or 2 per cent, to $68.47 and National Australia Bank was up 54¢, or 1.8 per cent, at $29.92.
Among the miners, Rio Tinto dropped 33¢ to $53.65 and BHP Billiton lost 11¢ to $32.80. Fortescue Metals Group fell 9¢ to $3.25.
Construction company Lend Lease said on Monday it would merge its Australian construction and infrastructure businesses.
The company also said earnings from construction were down, and its shares dropped 70¢, or 7.5 per cent, to $8.65.
The Australian dollar was trading slightly higher at US96.2¢, from US95.94¢
Meanwhile, the bond market was weaker ahead of Wednesday's Fed meeting.
UBS interest rate strategist Andrew Lilley said trading volumes were low. "Most participants will be waiting for the outcome of the RBA minutes on Tuesday and the outcome of the FOMC [the Fed's federal open market committee] minutes on Wednesday night."
The September 10-year bond futures contract was trading at 96.595 (implying a yield of 3.405 per cent), down from 97.635 (2.365 per cent) on Friday. The three-year bond contract was at 97.435 (2.565 per cent) down from 97.475.
Frequently Asked Questions about this Article…
Renewed demand for banking stocks pushed the S&P/ASX 200 higher, closing 34.1 points (0.71%) up at 4,825.9. OptionsXpress analyst Ben Le Brun said banks sparked a turnaround as bargain hunters and traders took positions ahead of the US Federal Reserve meeting.
Big four banks all rose: ANZ gained 63¢ (2.2%) to $28.45, Westpac added 53¢ (1.8%) to $29.47, Commonwealth Bank lifted $1.37 (2.0%) to $68.47, and National Australia Bank was up 54¢ (1.8%) at $29.92.
Local investors were nervous ahead of the Fed's policy meeting amid speculation it may start winding back its third round of bond purchases (quantitative easing). Some traders were taking positions before the decision, and analysts said any delay in tapering could be positive for risk assets.
Mining stocks were sold amid concerns about demand in China. The article reports Rio Tinto dropped 33¢ to $53.65, BHP Billiton lost 11¢ to $32.80, and Fortescue Metals Group fell 9¢ to $3.25.
Lend Lease said it would merge its Australian construction and infrastructure businesses and reported that construction earnings were down. The company's shares fell 70¢ (7.5%) to $8.65 following the announcement.
The bond market was weaker ahead of the Fed meeting, with lower trading volumes. The September 10‑year bond futures contract traded at 96.595 (implying a yield of 3.405%), down from 97.635 (2.365%) on Friday. The three‑year contract was at 97.435 (2.565%), slightly down from 97.475.
Yes — the Australian dollar traded slightly higher, at around US96.2¢, up from US95.94¢ as investors positioned ahead of central bank announcements.
According to market strategists in the article, investors should watch the RBA minutes due on Tuesday and the US Federal Open Market Committee (FOMC/Fed) minutes and meeting on Wednesday night — outcomes that could influence trading volumes, bond yields and risk assets such as bank and mining stocks.
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