Australian stocks closed flat on Monday as some weak economic figures from China undermined momentum from a massive rally in Westpac Banking Corp. Data showed China's third quarter economic growth slowed to below 7 percent for the first time since the global financial crisis. The S&P/ASX 200 index rose 1.5 points or 0.03 percent to 5,269.7. The benchmark has dropped 2.6 percent in 2015 amid concerns about slowing growth in Australia's biggest trade partner, China.
Westpac rose 3.7 percent when its shares resumed trading after a halt for raising capital. New Zealand's benchmark NZX 50 index rose 14.8 points or 0.3 percent to finish the session at 5,834.8. Data due later in the day is expected to show China's third quarter economic growth slowed to below 7 percent for the first time since the global financial crisis. In contrast, shares in Westpac climbed as much as 4.5 percent to a two-month high after a trading halt was lifted. Last week, the lender said it would raise A$3.5 billion to meet strict capital rules and surprised the market by lifting its home loan rates to protect its profits.
The unexpected move has fuelled speculation that other lenders will follow suit. Investors are looking to see if Commonwealth Bank of Australia will be next to raise its mortgage rates. National Australia Bank and Australia and New Zealand Banking Corp could wait until they reported their full-year earnings next week. If all the banks lifted their home loan rates, that would be tantamount to a tightening of financial conditions - an unwelcome development for a fragile economy. As a result, speculation of a cut in official interest rates has also grown.
"If CBA does raise rates, the interbank market's rate cut expectations will rapidly ascend towards 100 percent probability," said Evan Lucas, market strategist at IG. Across the Tasman Sea, New Zealand stocks struggled to maintain the momentum that has swept the benchmark S&P/NZX 50 index to a two-month high. It was last a tad softer at 5,819.3, having peaked at 5,867.9 - a high last seen on August 11. The index has rallied over 4 percent this month alone. Diversified retailer Warehouse Group Ltd slid 1.5 percent, giving back a chunk of Friday's 2.3 percent jump. Contact Energy eased 1.0 percent, pulling away from a one-month peak set on Friday.
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