By Rhiannon Hoyle
SYDNEY--Australian shares closed higher Monday, even after
paring a sharp rise early on in the session as investors took
profits ahead of an interest-rate decision due from the Reserve
Bank of Australia on Tuesday.
The stock market was buoyed by growing confidence over the state
of the U.S. economy after a stronger-than-expected monthly U.S.
jobs report. The figures on Friday sparked another record-breaking
session on Wall Street.
The benchmark S&P/ASX 200 closed up 0.5% at 5156.2 after an
early jump to 5201.3.
While investor appetite for risk assets, like stocks and
commodities, was whetted by the strong U.S. figures, expectations
for Australia's central bank to keep rates on hold capped the
market.
"People have positioned themselves for the likelihood of no
move," said IG Markets strategist Evan Lucas. A survey of 18
economists by the Wall Street Journal Friday showed just two
expecting the RBA to cut interest rates this week.
There are, however, increasing expectations for the central bank
to cut rates in June if it keeps them on hold this month, Mr. Lucas
said.
Resources companies led the market higher throughout Monday
trading.
Karoon Gas Australia Ltd. (KAR.AU) recorded one of the largest
rises of the day after reporting a new oil discovery offshore
Brazil. Shares in the company, which has now discovered oil in two
out of three wells drilled in the Santos Basin with Colombian joint
venture partner Pacific Rubiales Energy Corp. (PRE.T), closed up
23%. At their session high, they were up 28% at A$5.12, the stock's
highest value since early April.
The nation's largest resources companies, BHP Billiton Ltd.
(BHP.AU) and Rio Tinto Ltd. (RIO.AU), were stronger on the back of
broadly higher commodity prices. They closed up 2.8% and 3.1%
respectively.
Copper on the London Metal Exchange closed last week at US$7,270
a metric ton, up more than 6% on the day earlier. It isn't trading
Monday due to a national holiday in the U.K.
Fortescue Metals Group Ltd. (FMG.AU), the world's fourth largest
iron-ore miner, also rose despite a 1% dip in the iron-ore price as
the company celebrated the opening of its Firetail mine in Western
Australia.
Rare earths producer Lynas Corp. Ltd. (LYC.AU) meanwhile climbed
16% to its highest level in more than a month. The stock rallied
after Malaysia's prime minister, Najib Razak, Sunday won a tightly
fought election, alleviating concerns that a new government could
suspend the miner's license for its controversial processing plant
there.
Mirabela Nickel Ltd. (MBN.AU) surprised analysts with a 50% jump
in its stock. Its session high of 20 cents a share was more than
80% higher than its final value Friday.
Market participants were only able to cite improved base metal
prices and some short-covering as reasons for the unexpected jump.
A spokesman for the company wasn't immediately available to
comment.
A dip in March retail sales during morning trading in Sydney
disappointed the market, which had expected sales to rise.
Retailers subsequently underperformed, with Harvey Norman Holdings
Ltd. (HVN.AU) closing down 1.7% and Myer Holdings Ltd. (MYR.AU)
ending the day down 0.7%.
Share prices for the bourse's financial stocks drifted lower,
with trading volumes well below their average volumes, said IG's
Mr. Lucas. National Australia Bank Ltd. (NAB.AU) closed 0.7% lower,
while Westpac Banking Corp. (WBC.AU) ended down 1.1%.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
