PERTH: A late rally in banking stocks following Commonwealth Bank’s interest rate hike tipped the Australian sharemarket higher at the close, adding to momentum from a surging energy sector led by takeover target Santos.
The bourse was tracking lower for most of the day, as soft mining and media stocks weighed on the benchmark index, but CBA’s anticipated shadowing of Westpac’s rate hike last week drove a bounce in the banks to push the market into the black.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was up 15.5 points, or 0.3 per cent, to 5263.8, while the broader All Ordinaries gained 13.1 points, or 0.25 per cent, to 5299.6.
CBA blamed new capital reserve requirements for the need to jack up its variable rates, as Westpac did last week, a move which was welcomed by investors as all the banks rallied.
But the move took a stick to the local currency, which dove to a two-week low on the news. Some analysts expect the out-of-cycle interest rate hikes by the major lenders could push the Reserve Bank to cut the official cash rate twice more to as low as 1.5 per cent.
The Australian dollar fell from US72.31c to US71.83c immediately after CBA’s announcement at 3:30pm.
Commonwealth Bank inched up 0.77 per cent to $76.39, while ANZ shares added 0.14 per cent to $28.60.
National Australia Bank lifted 0.35 per cent to $31.83 while Westpac rallied 0.91 per cent to $31.03.
Meanwhile, fresh merger activity in the oil and gas market lit a fire under the energy sector today, after it was revealed that “ultra-high-net-worth” and sovereign wealth investment firm Scepter Partners had sought to buy oil and gas firm Santos for more than $7 billion.
