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ASX ekes out gains from bank buying

Steven Deare
·4-min read

Better than expected jobs figures have been followed by a turnaround for the ASX, which closed higher, but an industry analyst believes investors took their buying cue from elsewhere.

The S&P/ASX200 benchmark index closed up 16.1 points, or 0.25 per cent, to 6547.2 on Thursday.

The All Ordinaries closed higher by 16.2 points, or 0.24 per cent, to 6742.7.

The ASX was lower early, but climbed after October employment figures showed a massive jump in jobs as COVID-19 restrictions eased, mostly in Victoria.

The number of people employed grew by 178,800, exceeding economists' expectations of a 30,000 fall.

However, the jobless rate ticked up to seven per cent from 6.9 per cent.

While some attributed the ASX rise to the jobs data, Deep Data Analytics chief executive Mathan Somasundaram was not convinced.

He found the scale of the jobs rise hard to fathom.

"I don't think the market took it seriously. I'd expect the jobs situation will get worse before it gets better," he said.

Many experts have said the jobless rate will climb as government support programs such as JobKeeper are wound back.

Mr Somasundaram said investors had bought into Australian banks to benefit from a weaker US dollar.

"The main reason for the market recovery was the currency," he said.

"We've had weakness in the US dollar, and global investors will chase a higher dollar around the world."

The Aussie dollar was buying more than 72.90 US cents for most of the session.

The financial and information technology sectors were best, up by 1.19 per cent.

Meanwhile, South Australians were having their first day of six under stay-at-home orders due to a coronavirus cluster in Adelaide.

There were no new infections recorded in SA on Thursday, but 17 more people are suspected of having the disease.

On the ASX, the big banks all rose by more than one per cent. ANZ climbed two per cent to $22.45, the Commonwealth gained 1.7 per cent to $78.87, NAB rose by 1.84 per cent to $22.70 and Westpac surged by 2.31 per cent to $19.90.

Insurers were a blight on the financial sector. They were talking down a court ruling that businesses crippled by the pandemic should receive compensation.

A NSW Court of Appeal decision that insurers could not deny coronavirus-related claims for business interruption insurance has created the possibility of huge payouts.

Before the market opened, IAG suspended trading of its shares.

The company said it would assess the financial impact of the judgment.

QBE shares closed down 3.94 per cent to $10.00.

Suncorp shares were down 2.98 per cent to $9.43.

Property group Goodman held its annual general meeting and told investors it was on track to provide a nine per cent increase on earnings per share this financial year.

Chief executive Gregory Goodman said about 98 per cent of its properties were occupied and customer demand was steady.

Shares closed higher by 0.48 per cent to $18.68.

In mining, BlueScope gained 5.29 per cent to $17.72 after it raised guidance on first half underlying earnings to about $475 million.

This was about an 80 per cent rise on the same measure for the second half of the previous financial year.

Rio Tinto was best of the big three miners, and closed higher by 0.82 per cent to $98.92.

The Aussie dollar was buying 72.86 US cents at 1720 AEDT, lower from 72.95 US cents at Wednesday's close.

ON THE ASX

* The S&P/ASX200 benchmark index closed up 16.1 points, or 0.25 per cent, to 6547.2 on Thursday.

* The All Ordinaries closed higher by 16.2 points, or 0.24 per cent, to 6742.7.

* At 1720 AEDT, the SPI200 futures index was higher by six points, or 0.09 per cent, to 6544.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 72.86 US cents, from 72.94 US cents on Wednesday

* 75.66 Japanese yen, from 75.86 yen

* 61.49 Euro cents, from 61.43 cents

* 55.07 British pence, from 54.99 pence

* 105.58 NZ cents, from 105.74 cents.