ASX lifts as GPT shines, Rio slumps

Australian shares rose for the second consecutive session, tracking an improving sentiment globally, as investors re-assessed the outlook for the economy and interest rates after Monday’s rout.

The S&P/ASX 200 closed up 0.3 per cent, or 19.2 points, to 7699.8 after starting the session in the red. The main benchmark, however, was still licking its wounds after Monday’s sharpest sell-off in four years and was more than 3 per cent lower so far this week.

The All Ordinaries also advanced 0.3 per cent.

The mood was brightened across Asia after a Bank of Japan official reassured investors and said the central bank would not raise interest rates when financial markets are unstable. On Monday, the Nikkei collapsed 13 per cent.

‘Risk on’

“The BoJ came out with a much more dovish tone that people had expected, given they had raised rates a week ago,” said Matt Wacher, chief investment officer at Morningstar for Asia-Pacific. “It’s back to a ‘risk on’ type mood.”

The fund manager added that he expected investors to display prudence into the local earnings season.

“There will be a much more cautious approach at this point in time because the macro environment is weakening,” he said, citing softness in China’s economy and Australia’s consumer spending.

The Reserve Bank on Tuesday left the cash rate at a 12-year high of 4.35 per cent for its sixth consecutive meeting, saying that inflation was too high and ruling out a rate cut in the next six months.

Even so, traders remain sceptical about the RBA’s warning about rates. Bond futures imply a sizeable 57 per cent chance of an easing by November and are nearly fully priced for a rate cut by Christmas.

On the ASX, nine out of the 11 sectors on the main benchmark ended in green. The real estate sector led gains and offset losses in materials and banks.

Miners had a choppy session as iron prices seesawed despite data showing China’s imports of the main steelmaking ingredient jumped more than 5 per cent in July from June. China is Australia’s largest customer of iron ore.

The September iron ore contract on the Singapore Exchange fell 0.7 per cent to $US101.75 a tonne, nearing a low of $US99 that was touched last month.

Rio Tinto dropped 1.4 per cent to $116.65, BHP receded 0.6 per cent to $41.02 and Fortescue shed 0.9 per cent to $18.44.

Stocks on the move

Interest rate-sensitive retailers were mixed, but the property sector rebounded from a weak start. Heavyweights Goodman Group rose 0.7 per cent to $33.05 and GPT was among the top outperformers, up 3.4 per cent to $4.60.

The big four banks were split, with ANZ edging up 0.2 per cent to $27.36. National Australia Bank, was the biggest laggard, down 0.9 per cent to $34.74.

Oil and gas producer Woodside advanced 1.1 per cent to $25.40 after wiping out almost $2.6 billion in market value on Tuesday as investors struggled to accept projected returns on a large US acquisition.

And in corporate news, mining explorer Arcadium Lithium jumped 7.5 per cent to $4.31 as it announced the review of its WA operations due to soft prices.