Soaring iron ore futures lit a fire underneath mining stocks on Monday, which, combined with solid buying in the banks, saw the local sharemarket defy the regional trend to climb steadily higher.
Investors took their positive cue from the United States, which has just kicked off its earnings season with some strong profit growth in major banks.
The benchmark S&P;/ASX200 Index and the broader All Ordinaries Index each rose 0.4 per cent to 5748 points and 5803 points respectively.
However, investors failed to push the benchmark index above 5750, suggesting minds were looking ahead to a big week of political news, such as Theresa May's impending Brexit speech on Tuesday and Donald Trump's inauguration on Friday.
"There's a sense of hesitation among investors as we enter another week that is full of high-impact events," said Gary Huxtable, client adviser at Atlantic Pacific Securities. "A lot of things are happening this week both on the political and economic front, and these must be playing on investors' mind at the moment."
Stronger commodity prices saw mining giant BHP Billiton's stock rocket to a 17-month high, closing up 1.9 per cent to $26.77. Main rival Rio Tinto also had a solid day, up 1.5 per cent, while Fortescue Metal enjoyed a 3.3 per cent surge.
The big four banks traded moderately higher, following gains in their US peers on Friday and as news broke that National Australia Bank and ANZ both hiked fixed-rate mortgages again.
Brent crude was fetching $US55.65 a barrel in afternoon trade, which weighed on the likes of Caltex and Woodside Petroleum which finished down 0.8 per cent and 0.2 per cent respectively.
Given the geopolitical concerns around the world, gold is holding firm at $US1203 an ounce and Australia's largest gold producer Newcrest Mining lifted 2 per cent higher.
In other equities news, Kogan.com shares jumped 8.7 per cent to $1.62 after the online retailer set the scene for another upgrade to 2017 earnings.
Bellamy's snapped a three-day losing streak that saw the stock plunge 40 per cent, to lift 3.4 per cent on Monday.
Stock Watch: Crown Resorts
Shares in embattled gambling company Crown Resorts bumped up 0.3 per cent after Melco Crown, a Macau casino operator in which Crown has an 11.2 per cent holding, declared a $US650 million dividend. Of Crown's holding, 5.5 per cent of this stake is entered into an equity swap and as such Citi estimates there will be around $50 million in incremental dividends for Crown shareholders. The company has had plenty of news; last week, James Packer announced he would return to the Crown board after after only stepping down as executive chairman 17 months ago, while also announcing the departure of chairman Robert Rankin. On top of that, investors been wary of Crown recently after news broke that 17 staff have been arrested and detained in China on "gambling related" offences.
Iron ore
Iron ore futures in China jumped another 7.4 per cent to 654 yuan ($US95), extending last week's 11 per cent rally. The main driver last week was China's move to shut production of low-grade steel products by the end of June, as it tackles both overcapacity and chronic smog. Demand for the steelmaking raw material has been quite stable, traders said, with Chinese mills still favouring high-grade material to cope with costly coal prices. But the sharp price increases in steel and iron ore, as well as other raw materials coking coal and coke, suggest speculative investors took advantage of upbeat sentiment for the sector to raise bets in these commodities as they did last year.
Copper
Copper prices extended last week's jump on the back of strong economic data from the United States and China, but gains were more moderate than for iron ore. Customs figures on Friday showed China shipped in a record 4.95 million tonnes of copper in 2016, while US data revealed broad retail sales in that country climbed in December. Three-month copper on the London Metal Exchange rose 0.1 per cent to $US5917 tonne, after advanced more than 5 per cent last week. The most-traded copper contract on the Shanghai Futures Exchange was up 1.4 per cent at 48,220 yuan ($US6996) a tonne.
Bank home loans
Two of the big banks have hiked fixed interest rates on home loans, and a senior banker at National Australia Bank says funding costs that drive variable interest rates "remain elevated." With all of the other major banks lifting fixed interest rates in recent months, NAB said today its two-year fixed rate for new loans would rise by 23 basis points to 3.98 per cent; the three-year fixed rate would go up up by 20 basis points to 4.09 per cent; and the four-year rate by 60 basis points to 4.59 per cent.
Australian dollar
The Australian dollar lost a bit of ground against the greenback, falling back below US75¢, but it hit two-month highs against a depressed pound on growing fears of a "hard Brexit". The Aussie was fetching 62.18 pence, up 1.4 per cent following a 3.3 per cent gain last week, as well as US74.69¢, down 0.4 per cent. Boosting the Aussie was strength in iron ore prices. "Commodity prices and the weaker greenback have helped the Australian dollar higher in recent weeks, but it will likely be Trump's first few days in office which will make or break the current bullish sentiment for AUD," said ThinkMarkets senior market analyst Matt Simpson.
