The Australian sharemarket climbed on solid GDP data and the further easing of Ukraine tensions but failed to test the six-year high.
Following the 1.5 per cent surge to a record high on the S&P 500 last night the S&P/ASX 200 index rose 46 points, or 0.85 per cent, to 5446.2 after December-quarter GDP growth narrowly beat forecasts with a 0.8 per cent gain, a 2.8 per cent annual rate.
Sentiment was subdued as economists suggested domestic growth remained lop-sided mostly coming from net-exports, and while domestic spending growth of 0.8 per cent was better than forecast, the household savings rate fell to a three-year low of 9.7 per cent from 10 per cent.
“We and the RBA expect GDP growth to be below trend in 2014,” Westpac economist Andrew Hanlan said.
“Housing construction and resource exports will perform well. But we see three significant exogenous headwinds: a downturn in mining investment; sub-par public demand as governments look to improve their budgets; and a negative income shock via a declining terms of trade associated with a slowing of China.”
The Australian dollar was little changed at US89.60¢, while government 10-year yields rose 5.5 points to 4.059 per cent.
The AiG performance of services index jumped 5.9 points to 55.2 but was driven by primarily by the healthcare, financial and insurance sectors, sectors that tend to drain consumer spending.
The Shanghai composite index was off 0.2 per cent at the close of the ASX, but off the day’s lows after Chinese authorities maintained the country’s growth target at 7.5 per cent.
In Tokyo the Nikkei index jumped 1.6 per cent
Gold dropped $US13 to $US1337 an ounce, copper jumped 1.2 per cent to $US7050 a tonne and spot iron ore dropped 0.8 per cent to $US116.80 a tonne yesterday.
Russian president Vladimir Putin has said the use of force in Crimea was “a last resort”, a possible sign the situation was easing.
IG Market analyst Evan Lucas said the local market had rallied to a five and a half year closing high on the back of the positive news.
“All of that is contributing to why we have moved the way we have,” Mr Lucas said.
“Momentum has come in the second half of the day.”
Global markets reacted positively as the Ukraniun situation began to simmer down, he said.
“It actually hurt Russia more than anything on a financial basis, with their markets under pressure, their debt market under a lot of pressure and the rouble falling through the floor,” Mr Lucas said.
“It’s pushed them away from the precipice of doing something in Crimea.”
The banks were all higher, with Westpac up 58 cents at $34.23, ANZ up 34 cents at $32.52, Commonwealth up 59 cents at $75.52 and NAB 31 cents higher at $35.04.
The big miners were mixed, with BHP Billiton gaining 1.2 per cent to $37.80, Rio Tinto losing $1.02 to $64.81 and Fortescue Metals Group shedding four cents to $5.29.
The broader All Ordinaries index was up 45.6 points, or 0.84 per cent, at 5457.3 points.
The March share price index futures contract was up 48 points at 5453 points, with 30,362 contracts traded.
National turnover was 2.8 billion securities worth $6.2 billion.