Australian shares head for best month in five as commodity stocks surge

Australian shares rose on Friday and were headed for their best month in five, supported by gains in mining and gold stocks on the back of firm commodity prices.

The S&P/ASX 200 index advanced 0.4% to 8,960.50 by 2337 GMT.

The benchmark has risen 2.9% so far this month and is on track for its biggest monthly gain since August.

Gold and base metal prices have risen sharply this month, supported by a shift towards physical assets amid heightened geopolitical risks and a softer dollar.

Gold stocks were down 2.1% on the day, but have risen 15.3% so far this month in what could be their strongest January since 2015.

Miners were down 0.4% on the day, but have gained 13.4% so far this month, heading for their strongest January on record.

Global mining giant BHP inched higher by 0.6% on Friday, taking its gains for the month to 13.7%.

Earlier this week, the miner reclaimed its position as the country’s biggest listed company from top lender Commonwealth Bank, which has fallen 7.2% over January.

Rio Tinto rose 0.2% on Friday to hit a record high.

Banks, which rallied last year on expectations of interest rate cuts, have since been punished for failing to justify their lofty valuations, with recent data offering the central bank little incentive to ease rates anytime soon, leaving the sub-index down 1.3% for the month.

Elsewhere on the benchmark, healthcare stocks rose 1.8% on the day, while the real estate sectors climbed 0.8%.

Next week, investor focus will be on the Reserve Bank of Australia’s policy decision, with all the Big Four lenders expecting a quarter-point rate hike on February 3.

In New Zealand, the benchmark S&P/NZX 50 index rose 0.1% on the day to 13,364.19, but was down 1.3% for the month.