Big gains by the major banks after the release of softer-than-expected new capital requirements have driven the share market higher, while the Australian dollar remains at a two-year high.
The benchmark S&P/ASX200 index rose 0.8 per cent to 5,732.1 points, as the financial sector gained 2.4 per cent.
Shares in the big four lenders soared after the Australian Prudential Regulatory said it will raise the amount of capital major lenders must hold by 2020 to a level the market expects will not impact dividends or trigger capital raising initiatives.
CommSec market analyst Steven Daghlian said there was a relief rally after a sell-off on Tuesday in anticipation of tougher capital measures.
“If it wasn’t for the banks the market would not have moved much,” he said.
“The rest of the market has had a sluggish day.”
ANZ rose 3.9 per cent, Westpac gained 3.8 per cent, National Australia Bank lifted 3.1 per cent and Commonwealth Bank was three per cent stronger.
Weak areas of the share market included the miners, with BHP Billiton dropping 1.1 per cent as it flagged a significant cost related to industrial action in its copper operations, and Rio Tinto shed 0.7 per cent.
Telstra fell 1.7 per cent after comments from chairman John Mullen fuelled concern the group may cut its dividend payouts.
The big energy players were mixed despite an overnight rise in oil prices, with Oil Search down 1.9 per cent and Woodside Petroleum up 0.5 per cent.
The Australian dollar is still at its highest level since May 2015, trading at 79.22 US cents at 1700 AEST, supported by higher commodity prices and a subdued US dollar.
It soared on Tuesday after the Reserve Bank of Australia appeared to upgrade its view on the Australian economy and raised market expectations of rate rises in 2018.
ON THE ASX:
* The benchmark S&P/ASX200 was up 44.7 points, or 0.79 per cent, at 5,732.1 points
* The broader All Ordinaries index was up 41.3 points, or 0.72 per cent, at 5,779.4 points.
* The September SPI200 futures contract was up 40 points, or 0.71 per cent, at 5,671 points.
* National turnover was 2.2 billion securities traded worth $6.3 billion.
CURRENCY SNAPSHOT AT 1700 AEST
CURRENCY ASK BID PREVIOUS
AUD/USD 0.7922 0.7921 0.7915
AUD/JPY 88.81 88.78 88.7
AUD/EUR 0.6872 0.6869 0.6849
AUD/NZD 1.0752 1.0743 1.0766
AUD/GBP 0.608 0.6077 0.6069
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,239.84 per fine ounce, up from $US1,237.30 per fine ounce on Tuesday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 1.9654pct, from 1.9671pct on Tuesday
* CGS 4.75pct April 2027, 2.6727pct, from 2.6923pct
Sydney Futures Exchange prices:
* September 2017 10-year bond futures contract at 97.27 (implying a yield of 2.73pct) from 97.255 (2.745pct) on Tuesday
* September 2017 3-year bond futures contract at 97.94 (2.06pct), unchanged
(*Bond market closes taken at 1630 AEST previous local session)
