Australia Markets closed

ASX buoyant as hopes grow for new rate cut

Derek Rose

The Australian share market has enjoyed its best day in three weeks, with every sector gaining as weak economic data was seen to boost the odds of a February cash rate cut.

The benchmark S&P/ASX200 index closed Tuesday up 90.7 points, or 1.35 per cent, to 6,826.4 points, while the broader All Ordinaries was up 86.2 points, or 1.26 per cent, to 6,943.6 points.

"It was another good day, much like yesterday, it built consistently over the course of the day," said CommSec market analyst Tom Piotrowski. "The only caveat is that the volume is very low."

The market gained after ANZ released figures showing consumer confidence in December was at its lowest level since the global financial crisis, while job ads were at their lowest level since April 2016.

Economists blamed both declines on the bushfire crisis.

"The bottom line is it increases the likelihood of lower rates," Mr Piotrowski said.

The ASX's Rate Indicator shows that the market's odds of a rate cut have grown steadily in the last two weeks, with traders now predicting there is a better than 50-50 chance the Reserve Bank will cut rates on February 4.

The health care sector was up the most on Tuesday, gaining 2.0 per cent as CSL rose 2.4 per cent to $283.42.

PolyNovo climbed 11.6 per cent to $2.03 after reporting sales of its synthetic wound care dressing hit $2 million in December, up 134 per cent from a year ago, while biotech Mesoblast rose 6.5 per cent.

Wesfarmers gained 2.1 per cent to hit an all-time high of $43.07, while Coca-Cola Amatil rose 4.9 per cent hit a five-year high of $11.54.

Gold stocks retreated after Monday's strong gains, with Newcrest falling 1.9 per cent, Evolution dipping 2.3 per cent and Northern Star down 1.7 per cent.

Elsewhere in the mining sector, BHP rose 0.4 per cent to $39.55, Rio Tinto gained 0.6 per cent to $101.74 and South32 rose 2.9 per cent to $2.80.

Lithium miners continued their rise after a major Chilean lithium producer delayed a mine expansion plan, with Orocobre rising 7.0 per cent, Galaxy Resources gaining 8.7 per cent and Pilbara Minerals climbing 6.8 per cent.

Property developer Ingenia Communities Group dropped 3.8 per cent after forecasting that the NSW bushfires would cause at least $2 million in lost business at its South Coast tourism parks, although insurance should cover some of that.

All the big banks were higher, with Commonwealth rising 1.8 per cent to $81.20, NAB up 1.4 per cent to $24.90, ANZ gaining 1.3 per cent to $24.95, and Westpac up 1.2 per cent to $24.62.

Afterpay competitor Sezzle soared 41.9 per cent to $1.93, recovering most of last week's losses, after expressing confidence it would receive a previously denied California lending licence.

Late in the afternoon the Australian dollar dipped to a nearly two-week low against its US counterpart, buying 69.17 US cents, down from 69.38 US cents at Monday's close.

ON THE ASX:

* The benchmark S&P/ASX200 index closed up 90.7 points, or 1.35 per cent, at 6,826.4 points.

* The All Ordinaries was up 86.2 points, or 1.26 per cent, at 6,943.6 points.

* The SPI200 futures index closed up 91 points, or 1.36 per cent, at 6,764 points.

CURRENCY SNAPSHOT AT 1630 AEDT

One Australian dollar buys:

* 69.17 US cents, from 69.38 US cents on Monday

* 74.96 Japanese yen, from 74.96 yen

* 61.83 euro cents, from 62.15 cents

* 52.57 British pence, from 53.03 pence

* 103.85 NZ cents, from 104.31 cents