The Australian sharemarket climbed to a five-year closing high as relief over a likely diplomatic solution to the Syrian chemical weapons crisis and improved domestic consumer confidence offset a bounce in global borrowing costs to near two-year highs.
The S&P/ASX 200 index climbed 33.2 points, or 0.64 per cent, to 5234.4 points with miners leading the market on growing optimism Chinese growth had stabilised.
The Australian dollar climbed 0.4¢ to a high of US93.20¢, before sliding back to US92.80¢, on the firmer yield and growth outlook.
Australian government10-year yields jumped 6.3 points to a 19-month high of 4.186 per cent after US benchmark 10-years rose 4 points to 2.96 per cent as credit markets continued to price in the likelihood that the US Federal Reserve would begin tapering its bond purchasing program this year.
The Shanghai composite index climbed another 0.6 per cent by the close of the ASX as evidence mounted the Chinese government had stepped on the growth pedal via a “surge in infrastructure investment”, again delaying rebalancing growth towards a more services driven economy.
Infrastructure investment expanded 29.3 per cent year-on-year in August, the highest since December 2009 and up from 24.8 per cent in July.
“The acceleration in August industrial production, fixed asset investment and retail sales suggest that China’s growth is bottoming out,” HSBC China economist Qu Hongbin said.
“An expansion in government spending and stronger investment will continue to support growth in the coming months. Still modest inflation pressures also give Beijing authorities ample room to keep monetary conditions loose.”
In Tokyo the Nikkei index closed marginally higher.
Gold remained under pressure, easing $US7 to $US1365 an ounce, while copper reversed overnight weakness, rising 0.6 per cent to $US7220 a tonne. On Tuesday spot iron ore rose 0.3 per cent to $US135.20 a tonne.
The broader All Ordinaries index was up 31.7 points, or 0.61 per cent, at 5230.6. On the ASX 24, the September share price index futures contract was 26 points higher at 5232, with 19,747 contracts traded.
IG Markets analyst Chris Weston said investors were prepared to overlook global economic concerns to focus on growth prospects.
“The Chinese market is the inspiration behind our market’s gains,” Mr Weston said. “Global equities are in a bit of a sweet spot at the moment.”
Mr Weston said Chinese growth was pushing higher than many people had anticipated.
That trend looks set to continue as policymakers seek to attract foreign capital, and stem flows out of China.
Local gains were led by the materials sector, with particular strength in iron ore stocks thanks to a renewed interest in China.
BHP Billiton added 43 cents to $36.33, Rio Tinto gained $1.27 to $64.15 and Fortescue Metals Group was 29 cents higher at $4.80.
Among the major banks, National Australia Bank added 41 cents to $33.85, ANZ gained 23 cents to $30.40, Commonwealth Bank was 24 cents higher at $74.14 and Westpac rose seven cents to $32.48.
Macquarie Group gained $1.59 to $48.55.
National turnover was 2.07 billion securities worth $5.2 billion.