Dollar gains on China rates move; stocks up
The Australian share market has closed at its highest level in two months as mining and energy stocks posted significant gains.
At the close on Monday, the benchmark S&P/ASX200 index was up 29.8 points, or 0.6 per cent, at 5,001.9, while the broader All Ordinaries index was up 29.5 points, or 0.59 per cent, at 4,988.9.
On the ASX 24, the September share price index futures contract was 20 points higher at 4,962, with 16,465 contracts traded
The Australian dollar has gained some ground after China’s central bank said it would lift controls on lending interest rates, allowing financial institutions to set them.
Early this morning the local unit was trading at 91.79 US cents, up from 91.71 cents on Friday.
The People’s Bank of China (PBOC) on Friday night, Australian time, said the move would lower financing costs for businesses and support China’s long-term economic restructuring.
ANZ senior manager FX in Auckland Sam Tuck said the announcement drove the Aussie slightly higher.
“We saw a small boost when that was announced and then it dribbled back out as people decided its impact would be somewhat limited,” Mr Tuck said.
“But it’s still an important step in terms of liberalisation.”
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Australian bond futures have been quiet as investors sit tight awaiting the release of the June quarter inflation numbers.
Nomura rates strategist Martin Whetton said it had been a very quiet session for the Australian bond market on Friday night, with no data released to drive the markets either way.
He said the China central bank’s announcement had no impact.
“We are unlikely to do anything at all today,” Whetton said.
“We’ve got the Consumer Price Index (CPI) out on Wednesday, so until then, markets are just going to be very much range-bound.”
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