A strong quarterly production report from Australia’s biggest resources company pushed the sharemarket to a six-year closing high for the third day in a row.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lifted 0.6 per cent on Wednesday to 5576.7 points and 5567 points, respectively, as inflation accelerated to its highest rate in 2½ years.
Shares pushed higher at the open with investors taking a positive lead from Wall St overnight. Asian markets provided mixed cues in the afternoon.
The Jakarta Composite Index added 0.5 per cent to 5107.7 points after Joko Widodo was officially declared the winner of the Indonesian presidential elections on Tuesday night.
In local news the dollar spiked and shares were supported after Australian Bureau of Statistics data showed the consumer price index rose 0.5 per cent in the June quarter, posting a 3 per cent gain for the 2014 financial year. The Reserve Bank of Australia targets an annual inflation rate within the range of 2 per cent to 3 per cent.
Inflationary pressures are building in both Australia and the United States, UBS chief economist Scott Haslem said.
UBS believes the RBA will hold the cash rate steady until early next year. There is “clear evidence” the local economy was rebalancing away from mining and related industries, Mr Haslem said.
Resources giant BHP Billiton jumped 1.2 per cent to a near five-month high of $38.98 after providing an even more positive outlook than expected as it upgraded iron ore production guidance for the current financial year. As was widely predicted, the miner’s Pilbara operations beat production guidance for the June quarter.
“BHP’s quarterly report looked pretty solid, with good volume performance in the key divisions. Importantly, the focus on tighter capital allocation seems to be continuing, which hopefully bodes well for capital management prospects going forward,” Maple-Brown Abbott head of Asia-Pacific equities Geoff Bazzan said.
Australia’s biggest iron ore miner Rio Tinto added 0.6 per cent to $64.53.
On Wednesday the spot price for iron ore, delivered in China, dipped 0.6 per cent to $US95.40 per tonne. When the ASX closed, Dalian iron ore futures trading in China was tipping another fall overnight.
The big four banks were higher amid hopes of continuing low interest rates. Commonwealth Bank of Australia slashed its five-year fixed mortgage rate to a record low 4.99 per cent. CBA shares lifted 0.4 cent to $81.56, while Westpac Banking Corporation added 0.4 per cent to $34.09. ANZ Banking Group rose 0.4 per cent to $33.50, and National Australia Bank gained 0.6 per cent to $34.41.
Among other major blue-chip stocks Telstra Corporation ascended for the tenth consecutive session, up 0.4 per cent to $5.45. Woolworths gained 0.7 per cent to $35.94, and Wesfarmers added 0.7 per cent to $43.65.
Computershare jumped 1.7 per cent to $12.84 after unveiling a $86.3 million acquisition of a UK mortgage manager.
Rare earths miner Lynas Corporation was the best-performing stock in the ASX after gaining 17.7 per cent to 20¢ in its eighth consecutive session without a fall.
BBY Ltd analyst Mike Harrowell, who owns Lynas stock, said investors seemed to be heartened that the company has now passed the point by which it would be required to disclose if it was at risk of missing June quarter production guidance ahead of a formal update at the end of July.
“If Lynas does meet its production guidance it will mark an important milestone in the Malaysian processing plant achieving profitability,” said Mr Harrowell.
