Solid rise for ASX before rates forecast

·4-min read

Investors showed no fear of the Reserve Bank possibly bringing forward a rate rise as they gave the market its biggest lift in more than two weeks.

Almost every industry category of the ASX climbed on Monday, although Westpac's $3.5 billion share buyback and improved full-year profit had mixed feedback.

Most analysts were discussing the possibilities of Tuesday's monthly RBA monetary policy meeting.

Many have tipped the bank to bring forward its forecast of a rate rise after it did not defend surging bond yields.

Investors are seeking better returns in the bond market, betting that higher inflation will require rates to rise before the RBA's 2024 forecast.

The Royal Bank of Canda's Su-Lin Ong said she was looking for a shift in the Reserve Bank policy stance.

She said this could mean the bond-buying program ended sooner, which would ultimately lead to rate hikes.

Monetary policy will also be in the spotlight in the US when the Federal Reserve meets this week.

Royal Bank of Canada analysts have tipped the central bank will begin easing bond buying.

Inflation has been higher in the US than Australia and the former is expected to lift rates sooner.

Meanwhile, Chinese manufacturing continues to struggle. Factory activity contracted more than expected in October and shrunk for a second month, hurt by persistently high raw material prices and softer domestic demand.

ASX investors did not appear to pay much notice to the China data.

The benchmark S&P/ASX200 index closed higher by 47.1 points, or 0.64 per cent, to 7370.8.

The All Ordinaries closed up 53.1 points, or 0.7 per cent, to 7692.2.

Investors looked past Westpac's earnings and worried about its declining profit margins and rising costs.

They sent shares lower by more than seven per cent to $23.78.

NAB fell 0.91 per cent. ANZ was little changed. The Commonwealth improved by 1.54 per cent.

Elsewhere there were a couple of company tie-ups.

Seven West Media is proposing to buy regional TV broadcaster Prime in a deal worth $131.9 million.

The two companies have reached conditional agreement for a combined network which would reach 90 per cent of Australians.

Prime encouraged investors to vote for the proposal and said it would give a certain outcome amid a challenging and uncertain future for regional television.

Seven shares closed up by more than 14 per cent to 52 cents.

Prime shares surged by almost 74 per cent to 40 cents.

Victorian telecommunications provider AusNet has agreed to a takeover from a Brookfield Asset Management consortium.

The consortium would buy all shares for about $10.2 billion, or $2.65 each.

The AusNet board has preferred the bid to that of energy provider APA Group.

AusNet shares were up 3.64 per cent to $2.56.

APA shares were higher by 2.56 per cent to $8.41.

In mining, Fortescue rose 2.87 per cent to $14.33. BHP lost about half a per cent and Rio Tinto gained 0.75 per cent.

Property group Charter Hall raised its forecast for full-year earnings to at least 83 cents per security.

The upgrade follows independent valuations of funds which require performance fees be paid to the group.

Charter Hall is managing $54 billion in property.

Shares were 3.87 per cent to $18.00.

The Australian dollar was buying 75.05 US cents at 1727 AEDT, lower from 75.49 cents at Friday's close.


* The benchmark S&P/ASX200 index closed higher by 47.1 points, or 0.64 per cent, to 7370.8 on Monday.

* The All Ordinaries closed up 53.1 points, or 0.7 per cent, to 7692.2.

* At 1727 AEDT, the SPI200 futures index was down 12 points, or 0.16 per cent, at 7335 points.


One Australian dollar buys:

* 75.05 US cents, from 75.49 cents on Friday

* 85.79 Japanese yen, from 85.59 yen

* 64.95 Euro cents, from 64.61 cents

* 54.89 British pence, from 54.68 pence

* 104.59 NZ cents, from 104.95 cents.

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