Banks lead ASX higher at close
The Australian sharemarket ended its losing streak after the European Central bank ratcheted up demand for yield by announcing negative deposit rates for bank excess reserves in the region.
The S&P/ASX 200 index climbed 27.1 points, or 0.5 per cent, to 5464 as bargain hunters snapped up the major banks and other high yielding stocks following the ECB's radical move last night that also revived the global currency war.
The Australian dollar jumped US0.6� to US93.30� and the euro initially fell 0.8 per cent before reversing to trade 0.5 per cent higher at $US1.3660 after the ECB cut overnight lending rates by 10 points to 0.15 per cent and the bank deposit rate to minus 0.1 per cent.
Government 10-year yields edged up 0.5 points to 3.78 per cent today, while US 10-years slipped 2 points to 2.58 per cent and German 10-years dropped 2 points to 1.40 per cent.
ECB president Mario Draghi went a long way in delivering on market expectations by also announcing long term funding facilities for "targeted non-financial" borrowers, but only promised to implement quantitative easing after further investigations into the policy.
"These measures are a big step, the question remains is if the right corporates will use them," National Australia Bank currency strategist Emma Lawson said. "It will feed the liquidity monster that present markets crave, but only time will tell if it solves the European periphery's problems."
The Shanghai composite index was off 0.6 per cent at the close of the ASX after the Chinese banking regulator vowed to expand lending and other sources of finance to small businesses while attempting to curb unregulated shadow banking.
In Tokyo the Nikkei index was flat.
Gold jumped one per cent to $US1256 an ounce, copper fell 0.6 per cent to $US6740 a tonne, spot iron ore eased 0.3 per cent to $US94.20 a tonne yesterday and Dalian iron ore futures were per cent today.
