The Australian sharemarket sighed with relief along with other global markets as US Republican hardliners buckled at the 11th hour and agreed to a deal that averted a US debt default for at least three more months.
However, having consistently discounted a deal the market response was muted and the S&P/ASX 200 index gained 20.2 points, or 0.38 per cent, to 5283.1 points as market attention turned to deteriorating global growth momentum.
Turnover surged almost 70 per cent above the last week’s average but softness among miners capped overall gains.
Overnight the US S&P 500 index soared 1.2 per cent after House speaker John Boehner defied Tea Party hardliners and agreed to a deal that would keep the US government funded until January 15 and suspend the debt ceiling until February 7.
The Australian dollar edged up to US94.40¢, but government 10-year bond yields dropped 9.8 points to 4.14 per cent on expectations US Federal Reserve tapering would be delayed until at leats next year to offset the 0.6 per cent hit to US GDP growth.
Forex.com analyst Chris Tedder said political behaviour might be better in February because of mid-term elections, but some damage had already been done to the US.
“The bulletproof coating of the ultimate safe haven asset, US debt, has been punctured, albeit only by a pinprick,” he said.
“If US politicians continue to bicker to the point where they almost cause the world’s largest economy to default on its debt, then the market may start to lose faith in the previously unchallenged assumption that investing in US government debt is zero beta play.”
The Shanghai composite index was up 0.4 per cent at the close of the ASX, while in Tokyo the Nikkei index was up 0.7 per cent.
Gold was little changed at US1381 an ounce, copper lost 0.6 per cent to $US7217 an ounce and spot iron ore edged up to $US133.70 a tonne yesterday.
CMC market analyst Ric Spooner said the news from the US had dominated the local market today.“It’s not an overly large movement and the market had built a zero defensive premium into the price running into this,” CMC market analyst Ric Spooner said.
“Whilst there has been a bit of a relief rally, it hasn’t been too loud.”
Mr Spooner said the release of positive local business confidence data had also buoyed investors.
The major banks posted solid gains.
ANZ rose 21 cents to $31.69, Commonwealth Bank added 67 cents to $73.43, National Australia Bank added 53 cents to $35.64 and Westpac put on 41 cents to $33.62.
The big miners were mixed, with BHP Billiton up two cents to $35.80, Rio Tinto down 40 cents to $63.71 and Fortescue Metals Group down 16 cents to $5.24.
Gold miner Newcrest lost six cents to $10.14 despite beating expectations to produce 586,573 ounces of gold during the September quarter.
Energy giant Woodside fell 52 cents, or 1.4 per cent, to $38.00 after quarterly revenue fell 0.5 per cent to $US1.338 billion ($A1.40 billion).
Meanwhile, Ten Network Holdings lost half a cent to 28.5 cents after its full-year loss blew out to $285 million amid one-off write-downs and falling revenues.
Shares in Australian building products maker Boral rose 28 cents to $5.03 after it entered into a partnership with a US firm to create a $US1.6 billion ($A1.68 billion) plasterboard and ceilings joint venture.
The broader All Ordinaries index was up 17.5 points, or 0.33 per cent, at 5281.9.
The December share price index futures contract was 21 points higher at 5273, with 20,251 contracts traded.National turnover was 1.38 billion securities worth $3.5 billion.