Australia shares rally, draw support from U.S. fiscal talks
Australian shares rallied 0.6 per cent on Tuesday, supported by miners, as hopes of a compromise in the U.S. fiscal crisis and comments from the Australian central bank that it was open to interest rate cuts boosted sentiment.
Leading U.S. lawmakers expressed confidence they could reach a deal to avert the “fiscal cliff”, a toxic US$600 billion combination of earlier failed budget deals. Republican and Democratic leaders have agreed on a framework to reform the tax code and government benefit programs next year.
The benchmark S&P/ASX 200 index ended 24.3 points higher at 4,385.7 according to the latest data. The index rose 0.6 per cent on Monday.
Bellwether miners BHP Billiton Ltd and Rio Tinto climbed 1.1 per cent and 1.4 per cent respectively.
“There’s some optimism at the moment about the Americans doing something constructive about their fiscal cliff problem,” said Damien Boey, equity strategist at Credit Suisse.
“People have also been a bit more inspired by the fact that the RBA (Reserve Bank of Australia) is willing to cut rates into this cycle.”
Australia’s central bank said it was still open to interest rate cuts but judged it appropriate to leave policy unchanged earlier this month due to a pick-up in inflation at home and a slightly more positive global backdrop.
U.S. markets will be closed on Thursday for the Thanksgiving holiday.
Lynas Corp soared 4 per cent after it said it expects to start processing rare earth minerals from a plant in Malaysia next month, despite opposition from environmentalists over health concerns.
Origin Energy jumped 3.2 per cent, after media reported Royal Dutch Shell might feed its gas into other LNG projects in the area due to rising costs.
New Zealand’s benchmark NZX 50 index rose 0.8 per cent, or 30.4 points to 3,973.
