Investors fuel rise with faith in banks

The S&P/ASX 200 rose for a third straight day, gaining 35.9 points (0.9%) to 4,245.7 — its highest close since May 15. The short-term rally was driven by investor hopes that central banks will step up stimulus to boost global growth, positive follow-through from Wall Street and European markets, and strong gains in financial stocks. The index is about 3.7% higher month-to-date and looks set for its best monthly gain since January.

Financial stocks were among the best performers and the big four banks contributed almost half of the ASX 200’s gain. Commonwealth Bank hit a 26‑month high, closing at $57.20, while Westpac, ANZ and NAB also rose to around $23.26, $23.40 and $24.61 respectively. Investors pushed bank stocks higher on expectations that easing borrowing costs or stimulus could support bank profitability and risk appetite.

Telstra touched $4 for the first time since December 2008 before easing back to close at $3.98, about 0.5% higher. For everyday investors, the move shows renewed interest in large domestic telco shares, but the intraday volatility also highlights that single‑stock moves can be sharp even in a broadly rising market.

Yes. US Federal Reserve officials were due to meet to discuss monetary policy, and European officials were scheduled to meet later in the week. Investors hoped those meetings would signal further stimulus or measures to contain borrowing costs, and that expectation helped buoy risk assets and Australian shares, particularly banks.

The Australian market benefited from a slightly softer US dollar: the dollar eased back from a four‑month high of just under US105 earlier in the day to close at US104.65. Currency moves like this can support commodity and equity prices by improving relative returns and easing global financial conditions.

Fortescue Metals lost ground amid doubts about how it would fund cost blowouts on an expansion project. Those company‑specific concerns were compounded by falling iron ore prices, which had sunk almost 15% over the previous 13 trading days, increasing sector uncertainty.

Investors should watch upcoming central bank meetings (including the US Fed and European officials) for any signs of additional stimulus, and important Chinese manufacturing figures due out soon — weak Chinese manufacturing data could raise anxiety around resource stocks. Also monitor iron ore price trends and any company updates on project funding or costs.

Comments from European political and financial leaders indicating readiness to protect the single currency helped buoy European stocks and global risk sentiment. That improved sentiment can flow through to Australian markets, making investors more willing to buy bank and other cyclical stocks if they expect borrowing costs to fall.