Australian stocks rose 0.9 percent on Tuesday on light bargain hunting, but ended the month down 2.4 percent, their worst monthly fall in nearly a year, with analysts saying on valuations alone, the market should rebound. Analysts see valuations around 7 percent cheap, which could fuel buying, however the rebound could be held back if the US dollar strengthens, weighing on commodities demand.
"It's very delicately balanced around the fate of the US dollar," said Damien Boey, equity strategist at Credit Suisse. The US dollar's direction would also be a factor for the Reserve Bank of Australia. Worries about Australia's two-speed economy were highlighted in data on Tuesday which suggested that the gross domestic product report due on Wednesday would show a sharp contraction in the first quarter. Analysts said that would make it hard for the RBA to raise rates in June even though it has flagged a tightening bias.
Keeping rates on hold would help the beleaguered Australian housing market and retailers. The benchmark S&P/ASX 200 index gained 40.8 points to close at 4,708.3, an 11-day high. New Zealand's benchmark NZX 50 index picked up 4.7 points, or 0.1 percent, to close at 3,547.6, to post a 0.8 percent rise in May.
Top miners BHP Billiton and Rio Tinto both gained around 1 percent. The big four banks rose between 0.6 and 1.2 percent. Volumes remained light after public holidays in the United States and Britain sapped global trading. Container group Royal Wolf made a strong debut on the ASX, after raising A$91.5 million in the biggest IPO this year. The stock closed at A$2.06, 13 percent above its issue price, valuing the group at A$207 million. Aquila Resources jumped 6.6 percent to A$8.90 after saying a study had confirmed the technical and financial viability of the Eagle Downs coking coal development in Queensland, co-owned by Brazil's Vale.
Comments
Comments are closed for this article.