Hopes for euro solution lift stocks

THE sharemarket hit a near-three-month high yesterday after Germany’s government said it would support the European Central Bank’s bond-buying program, and as investors hoped Spain would call on the European Union for a full bailout.

It was enough to see riskier assets become more popular, with resource stocks making the biggest gains.

The dollar surged above US106¢ after the Reserve Bank kept the cash rate steady at 3.5 per cent.

The benchmark S&P/ASX 200 Index closed up 19 points, or 0.4 per cent, at 4291.6.

Economists had expected the RBA to keep the cash rate steady, with most tipping it would cut rates one more time by the end of the year.

But the RBA said economic growth was around trend and core inflation around the bottom of its target range, leading some to conclude that there would be no more cuts this calendar year.

“We’ve got one more rate cut in there, we’ve actually formally got it in September, but I don’t think it’s going in September now,” said NAB chief economist Alan Oster.

“I think it’ll probably be in a couple of months, and it’s not impossible that you won’t even get it. We may be very close to the bottom of the [rate cut] cycle.”

Banks had a good day after rates were kept steady, with Westpac climbing 23¢, or 1 per cent, to $23.68. Commonwealth followed close behind, rising 44¢, or 0.8 per cent, to $56.82.

Some of the first companies to report on last financial year posted results below market expectations.

Leighton Holdings was the first big company to release its full-year profit, disappointing the market, as did hearing device maker Cochlear and toll road operator Transurban.

Leighton shares dropped 25¢, or 1.5 per cent, to $16.48. Cochlear fell $3.40, or 5.1 per cent, to $63 and Transurban lost 9¢, or 1.5 per cent, to $5.94.

Equipment maker Bradken’s 49 per cent rise in net profit sent its shares up 58¢, or 11.2 per cent, to $5.74.

Resources were stronger, with BHP Billiton up 16¢ at $32.16, and Rio Tinto 72¢ higher at $54.85.

BlueScope Steel was the best performer among the market’s top 100 companies, up 1.5¢, or 5.7 per cent, at 28¢.

With Agencies

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