World Markets

Australian Market Notably Higher Ahead Of RBA Decision

( - The Australian stock market is notably higher on Tuesday, led by the major banks, following the positive cues overnight from Wall Street and on relief that the financial services' Kenneth Haynes royal commission report did not recommend anticipated harsh measures on banks.

Investors now look ahead to the Reserve Bank of Australia's decision on interest rates due later today. The RBA is widely expected to keep its benchmark lending rate unchanged at 1.50 percent.

The benchmark S&P/ASX 200 Index is adding 111.40 points or 1.89 percent to 6,002.60, just off a high of 6,002.90 earlier. The broader All Ordinaries Index is advancing 101.50 points or 1.70 percent to 6,064.50. Australian shares closed modestly higher on Monday.

In the banking space, Westpac is higher by almost 7 percent and ANZ Banking is rising more than 6 percent, while National Australia Bank and Commonwealth bank are gaining almost 5 percent each.

However, mortgage brokers fell after the Kenneth Hayne report recommended reforms to trading commissions. Shares of Australian Finance Group are losing almost 29 percent and Mortgage Choice is lower by more than 25 percent.

Embattled insurance services provider Freedom Insurance Group has halted trade on its shares amid a fallout the banking royal commission's report.

IOOF Holdings has welcomed the royal commission's report despite the wealth manager being open to possible civil or criminal proceedings after the release of the report. The company's shares are gaining 13 percent.

Among the major miners, Fortescue Metals is higher by almost 4 percent, Rio Tinto is rising almost 3 percent and BHP Group is adding more than 1 percent.

Oil stocks are also higher even as crude oil prices declined more than 1 percent overnight. Oil Search is advancing more than 1 percent, Woodside Petroleum is rising almost 1 percent and Santos is up 0.2 percent.

Gold miners are weak after gold prices edged lower overnight. Newcrest Mining is declining 1 percent and Evolution Mining is down 0.2 percent.

On the economic front, the Australian Bureau of Statistics said that Australia posted a seasonally adjusted merchandise trade surplus of A$3.681 billion in December. That exceeded expectations for a surplus of A$2.225 billion and was up sharply from the A$1.925 billion surplus in November.

Exports were down A$634 million or 2.0 percent on month to A$37.924 billion, while imports sank A$2.058 billion or 6.0 percent on month to A$34.302 billion.

The ABS also said that the total value of retail sales in Australia was down a seasonally adjusted 0.4 percent on month in December. That missed expectations for a flat reading following the 0.4 percent increase in November.

The Australian Industry Group said that the services sector in Australia fell sharply into contraction in January with a seasonally adjusted PMI score of 44.3. That's down significantly from 52.1 in December, and it falls well beneath the boom-or-bust line of 50 that separates expansion from contraction.

In the currency market, the Australian dollar is lower against the U.S. dollar on Tuesday. The local currency was quoted at $0.7218, down from $0.7230 on Monday.

On Wall Street, stocks rose to two-month highs on Monday, led by technology stocks, as markets continued to benefit from recent upward momentum as well as the positive sentiment generated by last Friday's monthly employment report for January. Trading activity was somewhat subdued, however, amid uncertainty about trade talks between the U.S. and China along with the potential for another government shutdown.

The Dow climbed 175.48 points or 1.7 percent to 25,239.37, the Nasdaq jumped 83.67 points or 1.2 percent to 7,347.54 and the S&P 500 advanced 18.34 points or 0.7 percent to 2,724.87.

The major European markets turned in a mixed performance on Monday. While the U.K.'sFTSE 100 Index rose by 0.2 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.4 percent.

Crude oil prices retreated after moving higher earlier on Monday, as traders weighed energy demand prospects and supply situation amid OPEC-led supply cuts and U.S. sanctions against Venezuela's oil exports. WTI crude for March ended down $0.70 or 1.3 percent at $54.56 a barrel on the New York Mercantile Exchange.

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