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Aust shares post best week since April

Steven Deare
·4-min read

Australia's share market had its best week since April, albeit with a flat Friday, after investors smiled at the federal budget and regained hope for US economic stimulus.

The S&P/ASX200 benchmark index closed up 0.2 points, or 0 per cent, to 6102.2 on Friday.

The index gained 5.36 per cent this week, its best since a 6.31 per cent rise on April 10.

Yet investors appeared to baulk at helping the index move towards the 6200 level. This has been about the peak of the ASX200's trading range for the past four months.

The All Ordinaries index finished higher 6.7 points, or 0.11 per cent, to 6312.5.

There was a good lead from Wall Street, where investors were buoyed by US President Donald Trump's comments about the possibility of fiscal support before the November 3 election.

Only a couple of weeks ago investors were gloomy about the uncertainty of the election and renewed restrictions on movement in the US and Europe as coronavirus infections climbed.

Yet Tuesday's federal budget and Mr Trump's turnaround on stimulus from earlier this week have emboldened investors.

Burman Invest chief investment officer Julia Lee said the outlook was good.

"I look at the business cycle and when money is going in, that is the start of a new cycle," she said.

"The budget announcement was a game changer."

The budget brought forward tax cuts, offers businesses credit to hire young people and allows most to write off the full value of eligible assets and other measures.

Ms Lee expected similar momentum in the US if stimulus is approved.

"There's no doubt what's driving markets isn't fundamentals or earnings; it's money being pumped like we've never seen before into economies and interest rates falling," she said.

There has been good news for Australia's economy on the housing front.

Home buyers took advantage of a virus-flattened housing market in August, as borrowing rose by 12.6 per cent on the previous month.

New loan commitments for housing were worth $21.29 billion in August, according to seasonally-adjusted Australian Bureau of Statistics data. Owner occupiers drove the gain.

On the ASX, energy was the best performing sector, up 0.7 per cent. Oil Search had a 2.48 per cent gain to $2.89.

The materials sector was better by 0.46 per cent but its biggest players were down.

BHP lost 0.19 per cent to $36.58, Rio Tinto was down 0.47 per cent to $97.50 and Fortescue was lower 0.29 per cent to $16.95.

The best of the large caps was Oceania Healthcare, higher by 11.43 per cent to $1.17, after it allocated $NZ125 million in fixed rate bonds.

Results were mixed across the banks. ANZ gained 0.38 per cent to $18.61, the Commonwealth lost 0.59 per cent to $67.71, NAB fell 0.37 per cent to $18.69 and Westpac rose 0.5 per cent to $18.21.

Earlier, US stocks ended higher as Mr Trump fuelled hopes of fresh fiscal support but data showed the labour-market recovery was struggling for momentum.

Jobs data for September will be published on Thursday and is expected to show unemployment growing as per government warnings.

Reserve Bank governor Philip Lowe will speak the same day for a Citi Australia conference. Listeners will be tuned for clues of changes to monetary policy.

There will be AGMs for the Commonwealth Bank and Telstra on Tuesday, and BHP and CSL on Wednesday.

The Aussie dollar was buying 71.75 US cents at 1715 AEDT, higher from 71.51 US cents at the close of trade on Thursday.

ON THE ASX

* The S&P/ASX200 benchmark index closed up 0.2 points, or 0 per cent, to 6102.2 on Friday.

* The All Ordinaries index finished higher 6.7 points, or 0.11 per cent, to 6312.5.

* At 1715 AEDT, the SPI200 futures index was lower by 5.0 points, or 0.08 per cent, at 6091.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 71.75 US cents, from 71.53 US cents on Thursday

* 76.01 Japanese yen, from 75.83 yen

* 60.95 Euro cents, from 60.75 cents

* 55.45 British pence, from 55.30 pence

* 108.70 NZ cents, from 108.68 cents.