The Australian sharemarket rallied for the fourth straight session in thin holiday trade following another record high on Wall Street last night.
The S&P/ASX 200 index climbed 35.2 points, or 0.67 per cent, to 5327.2 points as investors shrugged off the Chinese credit crunch and higher global borrowing costs.
Shanghai stocks were trading 0.7 per cent up at the close of the ASX after the People’s Bank of China injected cash into the banking system via collateralised repo’s - repurchase agreements – for the first time in three weeks to ease the acute cash shortage.
Shanghai seven-day repo rates hit a hefty 7.6 per cent yesterday, despite an injection of $55 billion on Friday, and were steady today, but indicating an ongoing cash shortage for smaller banks, three-day rates leapt 173 points to 7.83 per cent as the uncertainty of PBOC money market operations encouraged cash hoarding.
Last night the US S&P 500 index rose 0.5 per cent after consumer confidence remained flat, personal income rose 0.2 per cent in November, but fell short of forecasts for a 0.5 per cent increase, and personal spending matched forecasts with a 0.5 per cent increase in November.
The shortfall in income over spending meant consumers were digging into savings. The savings rate fell to 4.2 per cent, well short of the 5.2 per cent high reached in September.
However, the personal consumption expenditure deflator – a measure of inflation – was flat, indicating lack of pricing power in the world’s second biggest economy.
In Tokyo the Nikkei index was up 0.8 per cent.
The Australian dollar hit an overnight high of US89.60¢ but dropped back to US89.15¢ as the strong US dollar and Chinese credit market jitters kept traders on edge.
US global benchmark 10-year yields climbed 4 points to 2.93 per cent but Australian government 10-years slipped 2.5 points to 4.241 per cent as domestic growth uncertainty kept a lid on sentiment.
Gold slipped $US5 to $US1198, copper rose 0.4 per cent to $US7240 a tonne and yesterday spot iron ore fell 0.6 per cent to $US131.90 a tonne as steel exporters cut production and the tight liquidity curbed demand for iron ore.
"It looks like that Santa rally that we’ve been hoping for has come through for local investors,” CommSec market analyst Juliette Saly said.
"The last four sessions that we’ve seen have been a great boost for investor sentiment, really on the back of strong global growth figures that we saw coming through out of the US on Friday."
The consumer spending data follows Friday’s release of revised estimates for third quarter gross domestic product growth in the US to an annual rate of 4.1 per cent, up from 3.6 per cent.
Ms Saly said the volume of trading on the Australian market was light, but the retail sector had performed well.
Coles owner Wesfarmers gained 26 cents to $43.79, Woolworths added nine cents to $33.70, David Jones put on five cents to $2.99, Myer added five cents to $2.73 and Harvey Norman gained five cents to $3.15.
The banks also gained ground, with Commonwealth Bank up 40 cents to $77.16, National Australia Bank rose 16 cents to $34.78, Westpac added 22 cents to $32.14, and ANZ climbed 18 cents to $32.13.
The resources sector was more subdued, with BHP Billiton edging 13 cents higher to $37.29 and Rio Tinto dipped slipping six cents to $66.84.
The broader All Ordinaries index was up 33.9 points, or 0.64 per cent, at 5325.4 points.
The March share price index futures contract was 47 points higher at 5316 points, with 12,706 contracts traded.
National turnover was 880 million securities worth $1.98 billion.