(Adds analysis, quotes, stocks on the move)
SYDNEY, Oct (KOSDAQ: 039200.KQ – news) 11 (Reuters) – Australian shares soared 1.7
percent on Friday morning, its biggest gain in three months,
driven by a rally on Wall Street as politicians in Washington
moved to break a U.S. debt impasse that has soured market
sentiment in the past two weeks.
A strong financial sector underpinned the market. Westpac
Banking Corp was the highlight of the morning session,
climbing 2.3 percent after acquiring Lloyds Banking Group (LSE: LLOY.L – news) ‘s
Australian businesses for A$1.45 billion.
Top (Taiwan OTC: 8419.TWO – news) lender the Commonwealth Bank of Australia (Other OTC: CBAUF – news) added
1.7 percent while Australia and New Zealand Banking Group
rallied 2 percent.
The ‘Big Four’ banks have had a stellar year so far, with a
combined average gain of 26 percent compared to the broader
market’s 12.4 percent rise. Investors have piled into the
blue-chip stocks for their high dividend yields and record
The S&P/ASX 200 index rose 88 points to 5,235.1 by
0018 GMT, its biggest one day gain since July 2. The benchmark
slipped 0.1 percent on Thursday and is on track to add 0.4
percent for the week.
The market took its lead from major U.S. stock indexes,
which posted their strongest rally in more than nine months on
Thursday after signs of progress in negotiations to raise the
U.S. debt limit.
House Republican leaders acted to break a logjam in talks by
proposing a bill to raise the government’s debt limit without
attachments, a significant move as the Oct. 17 deadline that
would trigger an historic U.S. debt default closed-in.
“Although it’s positive to see the Republicans now willing
to negotiate, there is still plenty of headline risk that could
shake risk assets in the coming week,” said Tim Radford, global
analyst at Rivkin Securities in a note.
All the same, the signs of progress after nearly two weeks
of brinkmanship in Washington spurred a relief rally.
“It’s the first time in a while it’s green across the
screen,” said Chris Tynan, a dealer at Arnhem Investment
“Your cyclical industrials are outperforming traditional
defensives such as utility and telecom sectors.”
Industrials giant Leighton Holdings Ltd jumped 1.8
percent while top telecommunications provider Telstra
Corporation Ltd rose 0.9 percent.
The mining sector also joined the rally as copper rose
overnight. BHP Billiton Ltd advanced 1.3 percent while
rival Rio Tinto Ltd (Xetra: 855018 – news) climbed 2 percent.
Bega Cheese Ltd soared 3 percent to an all-time
high of A$3.81, after the company said it intends to proceed
with its offer to Warrnambool Cheese and Butter
shareholders. Shares in Warrnambool added 0.7
Elsewhere Seven West Media Ltd gained 2.6 percent
to A$2.36 after signing a long-term affiliation agreement with
Prime Media Group Ltd Prime Media
jumped 2 percent.
New Zealand’s benchmark NZX 50 index rose 0.7
percent to 4,749.2.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)