Growing expectations that the
Chinese government will introduce stimulus
to boost its economy has sparked a rise in commodities prices, which in
turn lifted local mining stocks.
Local equities also benefited from strong performances from Wall Street
which was buoyed by US consumer confidence climbing to a six-year high.
Australia's benchmark S&P/ASX200 rose 40.2 points, or 0.8 per cent
to 5376.8. The broader All Ordinaries finished 36.2 points, or 0.7 per
cent, higher at 5387.2.
However, there are still significant headwinds for the Australian
economy moving forward, Avoca Investment Management small companies
portfolio manager Jeremy Bendeich said.
"On China, it's around the bear case as to whether or not they will be
another downdraft in terms of expectations of economic growth and the
uncertainty around the murky financial sector that no one seems know
anything about,"
Mr Bendeich said.
Following the local reporting season, the
Australian market has had
limited corporate activity to drive the market one way or the other.
Traders are cautious about a recovery from sectors which rely on
domestic consumption.
"We're now in the phase where every Chinese economic number that comes
out that's bad, we're now going 'well, they're going to have to
stimulate'," BBY private client advisor
Henry Jennings said. "We're sort
of six or seven weeks out from the budget and that gives me a little
bit of caution."
Overnight the price of iron ore jumped 1.2 per cent to $US111.80 per
tonne. This led to gains in mining stocks. BHP Billiton rose 1.8 per
cent to $36.55, Rio Tinto added 2.1 per cent to $63.67 and Fortescue
finished up 3.1 per cent at $5.33.
Investment banks representing Myer and David Jones will begin talks to
discuss the possible merger of the two ailing department stores. Myer
chief executive Bernie Brooks said there had been no fresh talks on
Wednesday, but said the discussions would likely talk place in the next
week. David Jones shares gained 1 per cent to $3.20, while Myer slipped
0.9 per cent to $2.27.
Shares in Westfield Retail fell 1.3 per cent to $3.01 after the shopping
centre behemoth announced it secured $22 billion in finance to fund its
restructure plans. The company is aiming to split its Australian
shopping centres from its less profitable global assets.
National Australia Bank shares lifted 0.8 per cent to $35.05 following a
move from its UK business, Clydesdale and Yorkshire bank, to close 28
branches and invest £45 million ($81.5 million) in mobile banking and
branch development. The recovery in the UK economy has led to gradual
improvement from NAB's UK assets, which have weighed on the bank since
the GFC.
In a late night Parliament speech on Tuesday, Liberal Party senator Alan
Eggleston accused the Commonwealth Bank of Australia of defaulting
business customers of Bankwest unjustly, in an attempt to make back the
money it spent on the acquisition of the bank in the financial crisis.
CBA shares rose 0.7 per cent to $76.39.
Improvement in the Australian housing market has led to a profit upgrade
Australand, which is now expecting a 10 per cent jump in full-year
profit. Shares in the construction firm pushed 0.7 per cent higher to
$4.21. The idea of growing profit will likely put pressure on Stockland,
which is believed to be planning a takeover bid, to act fast.
Insurance Australia Group's proposed acquisition of Wesfarmers'
insurance underwriting business was given the green light from the
Australian Competition and Consumer Commission. IAG shares jumped 1.1
per cent to $5.50, while Wesfarmers shares dipped 0.4 per cent to
$41.69.
This news story is reprinted from www.smh.com.au
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