Australia shares edge higher as Westpac shines but gold stocks limit gains

Australian shares eked out modest gains on Monday, as Westpac’s record close after a profit beat offset weakness in gold stocks, while investors largely held their ground ahead of the central bank’s policy decision this week.

The S&P/ASX 200 benchmark index closed 0.2% higher at 8,894.8 points.

The benchmark gained just 0.4% in October.

Heavyweight financials climbed 1.3%, lifted by Westpac’s 2.8% gain.

Australia’s No.3 lender by market value posted an annual profit that modestly beat expectations, sending its shares to a record closing high.

“The results showed improving trajectory through the second half of the fiscal year, investors are looking at that so that the trend is improving and net interest margins are improving,” said Lochlan Halloway, an equity market strategist with Morningstar. Top lender Commonwealth Bank of Australia also advanced 2.3%, further boosting the benchmark.

However, gains on the benchmark index were capped by gold stocks’ 1.4% decline, as bullion prices eased on a stronger dollar and rising global trade optimism.

Major gold producers Northern Star Resources and Evolution Mining lost 2% and 2.5% respectively.

An unprecedented rally in gold prices has prompted a 90% surge in the gold sub-index this year, putting it on track for its best year since launch about two decades ago.

“Gold miners are a leveraged bet on the price of gold because they have fixed costs that they have to clear. Once they get above the cash cost, they get more leverage on the gold price,” Halloway said.

The Reserve Bank of Australia will meet on Tuesday and is widely expected to hold its key interest rate at 3.6% after hotter-than-expected core inflation data last week upended rate cut bets and reshaped near-term market positioning.

In New Zealand, the benchmark S&P/NZX 50 index closed 0.1% higher at 13,556.30 points.