ASX up on iron ore, banks

Views Of The Federal Reserve Ahead Of Federal Open Market Committee Announcement
Higher-than-expected inflationary pressures in the United States, could force the Federal Reserve to hike rates in November. Photographer: Andrew Harrer/Bloomberg

The Australian share market brushed aside a mixed response on Wall Street to fresh US inflation numbers overnight to finish higher on Thursday.

The S & P/ASX200 rose 32.6 points through trading, or 0.5 per cent, to close at 7186.5 points. The broader All Ordinaries was also up 0.5 per cent, to 7382.7 points.

Across the benchmark, seven of 11 sectors finished in the green, with Materials and Financials achieving the strongest gains.

A jump in iron ore price was recorded after futures in Singapore pushed past $US120 a tonne to a six month high. The commodity has rallied more than 20 per cent in recent months.

Iron ore mining heavyweights Rio Tinto climbed 1.8 per cent to $115.45 a share, BHP was up 0.8 per cent to $44.14, and Fortescue surged by 4.1 per cent to $20.41.

Iron ore futures in Singapore pushed past $US120 a tonne, pushing up local miners. Picture: supplied.

The big banks also recorded gains, rising 0.4-1.1 per cent, led by NAB.

Shares in Myer Holdings increased 1.6 per cent after the firm met its sales and profit guidance in its latest full-year report. The department store giant announced a final dividend of 1c.

August jobs report, released by the Bureau of Statistics, showed a further 64,900 people found work, well above the 23,000 anticipated by economists.

But with Australia’s population rate surging, the jobless rate held steady at 3.7 per cent, the seasonally adjusted data showed.

Tim Waterer, chief market analyst at KCM Trade said the August jobs data showed the labour market remained red hot and the Reserve Bank would consider further rate hikes if it didn’t begin to cool.

“August employment data demonstrated that the jobs market remains tight, albeit that the rise in part time jobs flooded the headline figure,” Mr Waterer said.

Bumper August job numbers came in well above market expectations. Picture: NCA NewsWire/Simon Bullard

“That's still lower than we likely will need to move to, for inflation to return to the RBA’s target … It means that further action from the RBA in terms of the interest rates between now and year end is certainly not out of the question.”

Following higher-than-expected inflation figures from the US overnight, Mr Waterer said markets were questioning whether this was the start of a new trend of higher prices, thus raising the prospects of a November rate hike by the US central bank.

“Investors will be watching to see what the US PPI data comes in tonight to see if that defeats the upside move and the CPI numbers is also replicated when it comes to those wholesale prices,” Mr Waterer said.

Alongside the update on US producer prices, traders will be closely monitoring the European Central Bank, which meets later tonight.

China will release monthly economic activity data on Friday.