The Australian share market has built on the previous day's strong gains, with rising commodity prices propelling energy stocks and miners.
The benchmark S&P/ASX200 index on Wednesday finished up 26.8 points, or 0.38 per cent, at 7,135.7, while the broader All Ordinaries rose 25.7 points, or 0.35 per cent, to 7,341.5.
The local bourse followed a positive lead from Wall Street overnight, with the Dow Jones Industrial Average up 0.9 per cent for its biggest gain in almost a month.
Despite Reserve Bank governor Philip Lowe striking a more dovish tone than many expected in his speech to the Economic Society in Brisbane, the market was unmoved.
Commonwealth Bank’s Belinda Allen says Dr Lowe was less definitive than in previous speeches.
The governor said he has “a completely open mind” to further changes and “it is possible that some further tightening will be required”.
“The addition of the word ‘possible’ to the above sentence is key,” Ms Allen said.
“This word was not included in the July board statement and could suggest the RBA is less convinced further tightening is required.”
Ms Allen says she expects one more rate hike, taking the terminal cash rate to 4.35 per cent.
NAB economist Tapas Strickland says the board’s next rates decision on August 1 will again be finely balanced, but expects two more rate hikes this year.
He is encouraged by inflation trending downwards in the US, which is a number of quarters ahead of Australia, and could indicate an imminent end to tightening cycles.
Those trends will be further clarified when US consumer price index data is released tonight, Australian time, with analysts expecting inflation for June to fall from the 4 per cent recorded in May.
Across the ditch, New Zealand’s central bank held interest rates steady for the first time in 13 meetings, marking an end to a historic and punishing tightening cycle.
Energy stocks were the biggest movers on the ASX, firming two per cent as commodities climbed.
The price of West Texas Intermediate climbed to more than $US75 a barrel, the highest level in over two months, as major crude exporters Saudi Arabia and Russia clamp down on supplies.
Oil and gas giant Woodside rose 2.7 per cent while exploration company Melbana Energy surged 15 per cent higher.
Materials stocks lifted one per cent and the remaining nine industrial sectors were mixed.
The big miners were boosted by a rising iron ore price, as promised Chinese stimulus signals construction may be back on the rise for Australia's largest trading partner.
BHP gained 1.7 per cent, Rio Tinto advanced 1.6 per cent and Fortescue Metals was 2.5 per cent higher.
Battery minerals producer Neometals jumped 11.7 per cent after announcing an agreement to sell recovered vanadium products to commodities multinational Glencore.
Diversified mining and manufacturing company Incitec Pivot confirmed it is considering selling off its fertiliser business, sending shares up 5.4 per cent.
Missing out on the fun were Bellevue Gold, which dropped 7.2 per cent as investors banked earlier profits, and rare earths miner Lindian which fell 13.3 per cent after securing a $35 million capital raising.
CBA retreated 0.5 per cent, while Westpac edged 0.2 per cent higher and ANZ and NAB both rose 0.9 per cent.
Pepper Money plunged eight per cent, as the non-bank home lender continues to search for a buyer.
KMD Brands slipped 9.8 per cent after the Kathmandu owner blamed softening consumer sentiment on a slower start to winter trading.
Little Green Pharma hit a three-month high, up 5.3 per cent after the legal cannabis producer won a commercial tender for a medicinal trial in France.
In company news, Australia's biggest fruit and vegetable producer Costa Group announced interim chief executive Harry Debney will step down at the end of the year, as the company negotiates a takeover bid from US private equity firm Paine Schwartz Partners.
The Australian dollar has continued to gain against its US counterpart, buying 67.08 US cents, from 66.80 at Tuesday’s ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Wednesday up 26.8 points, or 0.38 per cent, at 7,135.7.
* The broader All Ordinaries rose 25.7 points, or 0.35 per cent, to 7,341.5.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 67.80 US cents, from 66.80 US cents at Tuesday’s ASX close
* 93.55 Japanese yen, from 94.11 Japanese yen
* 60.83 Euro cents, from 60.65 Euro cents
* 51.77 British pence, from 51.91 pence
* 107.95 NZ cents, from 107.67 NZ cents.
