After a sluggish start, bank stocks did most of the heavy lifting on Tuesday, pulling the market higher as investors begin looking beyond central bank risks.
The benchmark S&P;/ASX200 Index rose 0.4 per cent to 5410.8 points, as did the broader All Ordinaries Index, which climbed to 5492.
"The market's been quite choppy, it's up today but it could all change tomorrow if we get some not so great Chinese data overnight," said Kerry Craig, global equities strategist at JP Morgan Asset Management. "There's some genuine shifts in investor sentiment that aren't driven simply by the idea of tapering by central banks.
"Over the last few weeks that's really seen the bond and equity markets sell off, but today that looks to have broken down a bit, with yields rising and the market going up as well."
Positive commodity prices helped mining and materials companies to have a good day. BHP Billiton closed 1.1 per cent higher but Rio Tinto finished flat. Gold miners liked a healthy gold price, up 0.3 per cent to $US1258 an ounce. Newcrest closed up 3 per cent and Regis Resources, St Barbara and Evolution were among the best performing names on the index.
In other equities news, Tatts Group and Tabcorp shares went into a trading halt amid speculation the two have reignited merger talks. Tatts had brief talks with Tabcorp about combining the pair's businesses, which would have created a $10 billion wagering giant. Tatts shares are frozen at $3.59 and Tabcorp's at $4.89.
Crown shares got a boosted after several analysts suggested the stock might be a buy following its 14 per cent slump to $11.15 on Monday. Investors earlier fled the stock after news broke that 18 Crown employees - including three Australians - were arrested in China, , but Citi said the sell-off was an "overreaction". The stock managed to close 1.7 per cent higher at $11.34, losing some of it early momentum.
Scentre Group and Westfield both enjoyed a small bounce in the morning, but traded mostly sideways for the afternoon.
"REITs are relatively expensive in this market compared to where they've been," said Mr Craig. "That drive for income, which is ever-present has meant people have previously piled into them."
Investors piled into Challenger on Thursday after the company announced a 3 per cent rise in assets and funds under management to $62 billion. Shares in the asset manager closed 6.2 per cent higher to $10.62.
Stock Watch
Shares in Whitehaven Coal had a rocky day, dropping 4 per cent in the morning after Credit Suisse downgraded the stock to "underperform", saying coal prices have probably peaked and the stock is looking expensive after its 300 per cent rally over the past six months. Analyst Paul McTaggart believes coal prices have peaked the financial year 2017 earnings will be the peak for Whitehaven in this coal price cycle. Meanwhile, Morgan Stanley is sticking with its 'overweight' recommendation and has a price target of $3.10, saying the benefit of higher contract prices is yet to fully kick in. Shares managed to claw back most the drop on Thursday, and finished the day flat at $2.97. Credits Suisse downgraded the stock from neutral but lifted the target price to $2.80, from $2.45.
Market Movers
Australian dollar
The Aussie dollar hit a two-week high of US76.75¢ on Tuesday afternoon. The surprise resurgence in metallurgical coal prices and higher bond yields are providing some support for the local currency as speculation mounts the US Federal Reserve will raise rates soon. The jump in coal price has boosted Australia's trade earnings and looks set to record its first annual gain in four years. The dollar stayed relatively stable following a speech from new RBA governor Philip Lowe, which suggested he is comfortable with the currency's present levels.
OPEC woes
The oil price has managed to stay supported about $US50 a barrel, though cracks are beginning to show in the OPEC supply deal that has given oil its recent lift. Iran has become the third nation to openly question OPEC's production data, saying the output estimates complied by the Vienna-based secretariat were unacceptable. The managing director of National Iranian Oil Company said Iran was pumping 300,000 barrels more a day than what OPEC estimates. Iraq and Venezuela have also both questioned the data.
NZ inflation
New Zealand's inflation reading came in above economists' expectations, though the overall annual inflation figure has been below the base of the Reserve Bank of New Zealand's 1-3 per cent target band for eight consecutive quarters. The consumer price index rose 0.2 per cent from a year earlier and annual inflation slowed from 0.4 per cent in the second quarter. The $NZ jumped to a high of US71.85¢ on the news, from US71.39¢.
Asian stocks
Shares around the region rose the most in two weeks as the $US further slides on fears the US Fed is nearing its next rate increase. Raw-materials producers led gains on the MSCI Asia Pacific Index as the greenback's slide gave a lift to commodities priced in the currency. The US interest-rate outlook continues to occupy investors with futures prices indicating a 66 per cent chance that borrowing costs will climb before the year is out.