Australia Market gains 1%

Headline indices of the Australian financial market closed higher on Monday, 17 December 2018, as investors chased for value buying across the board, after the reports of government's budget plan which is forecast to end more than a decade of deficits. Most of ASX sectors recouped ground, with shares in materials and resources being notable gainers whereas banks were notable losers. At closing bell, the benchmark S&P/ASX200 index advanced 56.27 points, or 1%, to 5,658.27 points, while the broader All Ordinaries index inclined 54.07 points, or 0.95%, to 5,732.87 points.

Investors risk sentiments underpinned after reports stated Australia's budget deficit for the fiscal year to June 2019 is expected be slashed to A$5.2 billion from the A$14.5 billion projected in May, which may help deliver a budget surplus by 2019/20. Prime Minister Scott Morrison plans to fight an election in the first half of next year on tax cuts which could be made possible through the proposed budget.

 

Shares of materials and resources were top gainers on the back of rising prices of most base metals. BHP was the standout leader with a gain of 3.5% to close at A$33.53 after announcing a special dividend of US$1.02 per share and the completion of its off-market share buyback. Rio Tinto rose 2.2% after completing the A$500 million sale of its French aluminium smelter, freeing up cash it also has said would be returned to shareholders. Mineral Resources which rose around 10.6%,

Banks were the big laggards after New Zealand announced tougher capital requirements. Australia and New Zealand Banking Group was one of the top drags, falling nearly 2%. Westpac Banking Corp fell 1% and Perpetual dropped 4%.

Among individual stocks, Australian Pharma Industries or API declined 6% after brokerage houses raised concerns its purchase of Sigma will be blocked by the competition watchdog. While the bid was made back in October, on Friday API announced it had taken a further 8% stake in Sigma for a total of 12.95%. Sigma Health was down 1.7%.

Shares in Perth-based shipbuilder Austal closed up 3.8% after it was contracted to make another two combat vessels for the US Navy.

CURRENCY: Australian Dollar, seen as a proxy for China-related trades, edged down against greenback on Monday. The Australian dollar was quoted at 71.73 US cents, down from 71.93 US cents on Friday; 81.42 Japanese yen, from 81.63; 63.43 euro cents, from 63.31; 57.03 British pence, from 56.95; and 105.62 NZ cents, from 105.81.

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