The share market has gained ground as better than expected Chinese factory data and stronger commodity prices fuelled a rally in mining and energy stocks.
The benchmark S&P/ASX200 stock index rose 0.91 per cent, with almost all sectors of the market higher, and the energy, mining and financial sectors the best performers.
CommSec market analyst Steven Daghlian said the release of a private survey of China’s manufacturing sector showed factory output grew at a faster pace than expected.
That combined with stronger commodity prices to drive the resources sector higher, he said.
“The market bounced after the slightly better-than-expected manufacturing data out of China before lunch and it steadily improved throughout the day,” Mr Daghlian said.
“We then had the interest rate decision in the afternoon which didn’t slow things down.”
Banks and insurers were already higher before the Reserve Bank announced at 1430 AEST that its cash rate remained on hold, as expected.
“There were no surprises overall in the RBA governor’s statement as far as economic growth and employment forecasts were concerned,” Mr Daghlian said.
“The big change was commentary around the Aussie dollar, where they essentially said that the stronger Aussie will hold the economy back and reduces the need for a rate hike.”
This has strengthened expectations that the RBA will keep rates on hold for the rest of 2017, he said.
Despite the RBA’s efforts to talk down the local currency, the Aussie remains at around 80 US cents.
Mr Daghlian said the Australian dollar’s strength is largely due to weakness in the US dollar.
On the share market, Origin Energy gained 3.9 per cent, Woodside Petroluem added 2.3 per cent and Santos was 0.9 per cent higher.
BHP Billiton gained 1.2 per cent, Fortescue Metals rose 1.4 per cent higher and Rio Tinto edged 0.2 per cent higher.
Commonwealth Bank was the best performer among the big four lenders, adding one per cent, while Suncorp gained 1.8 per cent and QBE Insurance lifted 1.5 per cent.
ON THE ASX:
* The benchmark S&P/ASX200 was up 51.8 points, or 0.91 per cent, at 5,772.4 points.
* The broader All Ordinaries index was up 46.7 points, or 0.81 per cent, at 5,820.6 points.
* The September SPI200 futures contract was up 53 points, or 0.94 per cent, at 5,820.6 points.
* National turnover was 2.7 billion securities traded worth $6.7 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 80.02 US cents, from 79.80 US cents on Monday
* 88.21 Japanese yen, from 88.30 yen
* 67.68 euro cents, from 68.01 euro cents
* 60.56 British pence, from 60.88 pence
* 106.76 NZ cents, from 106.37 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,268.12 per fine ounce, up from $US1,267.84 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 1.8768pct, from 1.8576pct on Monday
* CGS 4.75pct April 2027, 2.6595pct, from 2.6256pct
Sydney Futures Exchange prices:
* September 2017 10-year bond futures contract at 97.285 (implying a yield of 2.715pct), from 97.32 (2.68pct) on Monday
* September 2017 3-year bond futures contract at 98.03 (1.97pct), from 98.05 (1.95pct).
(*Bond market closes taken at 1630 AEST previous local session, currency levels taken at 1700 AEST previous local session)
