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Aussie market higher on U.S. lead

Xinhua, July 25, 2016 Adjust font size:

Aussie stocks have edged higher on Monday as the search for yield in equities continues in safe haven and defensive stocks following a U.S. lead.

At the open on Monday, the benchmark S&P/ ASX200 index was 27.4 points, or 0.50 percent, at 5,525.6 while the broader All Ordinaries index was up 26.4 points, or 0.47 percent, at 5,600.7

Aussie stocks have had a stellar run over the past two-weeks as traders speculatively price in potential monetary and fiscal stimulus over the next couple of months, though with key Bank of England and European Central Bank meetings giving no guidance, market participants are getting nervous.

"The spike in safe haven sectors underscores a growing feeling that the massive run up in equities over the past few weeks may have run out of steam," IG market analyst Angus Nicholson said, though Asian stocks should fare better with the strong lead from the U.S. in Friday's offshore session.

"The real winners in this scenario appears to be the US markets and the US dollar," Nicholson said as solid U.S. flash Markit PMI's at the weekend is providing momentum in U.S. economic activity, increasing chances of a Fed hike towards the end of the year.

However a stronger U.S. dollar is having effects on the commodities complex will all major industrials falling, as well as benchmark crude due to an fears of an oversupply in refined petroleum products.

"The materials and energy space look like they may be in for a bit of trouble today as they price in moves in commodity spot prices on Friday," Nicholson said.

The prospect of further easing from the Reserve Bank of Australia (RBA) next week is also supporting financial stocks, with ANZ up 0.55 percent, the Commonwealth Bank of Australia edging 0.67 percent higher, the National Australia Bank gaining 0.61 percent and Westpac 0.92 percent higher in early trade.

The materials sector was weighing however, with BHP Billiton was down 0.57 percent, rival Rio Tinto rose 0.17 percent, though gold miner Newcrest declined by 2.29 percent.

Oil Search lifted 0.68 percent, however Santos was flat and Woodside Petroleum declined by 0.29 percent.

Wesfarmers and rival Woolworths had risen 0.07 percent and 4.32 percent respectively.

Qantas shares were unchanged while Telstra rose 0.52 percent. Endit