Australian shares were broadly higher on Friday and on track for a second straight week of gains as Wall Street celebrated upbeat economic data. Each of the major US indexes touched record highs after economic indicators suggested the economy was picking up speed, bolstering firm expectations of a US Federal Reserve rate rise in June.
The ADP private sector report showed 253,000 jobs were added in May, beating a Reuters poll of 185,000 and providing a sturdy platform for the official non-farm payrolls report later in the day.
“We’ve got a positive lead from Wall Street to work off this morning and we’re seeing continuation in terms of bargain hunting in the financial space,” said Ben Le Brun, markets analyst at OptionXpress.
“Perhaps we’re seeing bargain hunting across the market given we’ve seen a sizeable pullback in the month of May.” The S&P/ASX 200 index rose 0.9 percent to 5,791.30 by 0327 GMT. It gained 0.2 percent in the previous session and had lost 3.4 percent in May.
Basic materials stocks gained as iron ore prices recovered from a week-long losing streak. The most-traded iron-ore contract on China’s Dalian Commodity Exchange was up 1.2 percent, after shedding about 15 percent over the past six sessions, an unwelcome development for Australia’s biggest export.
Mining sector bellwethers Rio Tinto and BHP Billiton were up 1.7 percent and 1 percent respectively, while world’s fourth-largest iron-ore miner Fortescue Metals Group was 1.2 percent higher. Despite Friday’s gains, the metals and miners index is headed for weekly losses. Major banks contributed most to the benchmark, rising in a range of 0.8 percent to 1.4 percent, with the ASX financial index set for its best week in a month. Utilities, among the best performers in the previous session, was the only sector in the red.
Electricity generator and distributor AGL Energy fell 3.3 percent to a two-month low of A$25.85, the sector’s biggest decliner. New Zealand’s benchmark S&P/NZX 50 index rose 0.4 percent to 7,482.82 and is headed for a second straight week of profits.
Financials and consumer shares were the biggest contributors to the gains, with building materials maker Fletcher Building Ltd clocking gains of 2.7 percent, making it the main index’s top performer.