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Stocks up on investor credit rating relief

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The Australian share market has closed higher as investors took some comfort that Australia’s triple-A credit rating seems secure for now, following the federal government’s mid-year economic update.

The benchmark S&P/ASX 200 index closed 0.53 per cent higher, with 10 of the 12 indexes finishing in positive territory.

CommSec market analyst Steven Daghlian said the federal government has “just done enough” to safeguard the nation’s triple A credit rating for the foreseeable future with its keenly anticipated economic update.

“We’ve had all three big ratings agencies saying that it won’t impact their triple A credit rating for now. I think that’s probably settled the nerves somewhat,” he said.

The forecast budget deficit of $36.5 billion for 2016/17 unveiled in Monday’s mid-year review was also a “bit better” than the government’s forecast of $37.1 billion in the May budget, Mr Daghlian said.

ANZ economists said the economic update has bought the government some additional time with ratings agencies.

“Passing key legislation ahead of the May 2017-18 budget will be critical if Australia is to maintain its AAA credit rating,” ANZ’s economists said in a research report.

Australia’s big four banks also gained ground, led by the Commonwealth Bank, which announced on Monday that it has sold its remaining minority shareholding in credit card giant Visa for $439 million, booking an after tax profit of $278 million.

CBA rose 37 cents to $81.43, Westpac gained 14 cents to $32.33, ANZ added 12 cents to $29.93 and National Australia Bank rose 11 cents to $30.08.

Insurers Suncorp and QBE also gained ground, rising 21 cents to $13.42 and 17 cents to $12.59, respectively.

Energy companies, including Woodside Petroleum and Santos also found support after oil prices rose more than two per cent to a near 17-month high.

Woodside jumped 17 cents to $31.10 and Santos rose two cents to $3.98.

Resource heavyweights Rio Tinto and BHP Billiton closed up 26 cents to $59.55 and nine cents to $25.09, respectively.

KEY FACTS:

* The benchmark S&P/ASX 200 index was up 29.2 points, or 0.53 per cent, at 5,562.1 points.

* The broader All Ordinaries index rose 23.1 points, or 0.41 per cent, at 5,612.8 points.

* The March share price index futures contract rose 33 points, or 0.6 per cent, at 5,527 points, with 28,324 contracts traded.

* National turnover was 2.70 billion securities traded, worth $5.04 billion.