Aust share market closes higher
Mon July 30, 2012 8:01am
THE Australian share market has closed almost one per cent higher, with the banks leading the way.
At the close on Monday, the benchmark S&P/ASX200 index was up 35.9 points, or 0.85 per cent, at 4,245.7, while the broader All Ordinaries index was up 32.5 points, or 0.77 per cent, at 4,266.9.
On the ASX 24, the September share price index futures contract was 31 points higher at 4,204, with 29,203 contracts traded.
The share market held on to early gains and was driven by gains on Wall Street and European markets with European political and financial heads saying they were prepared to do everything to protect the single currency.
CMC Markets chief market analyst Ric Spooner said those sorts of comments buoyed risk assets, with investors happy to push up Australian banks stocks if they thought the cost of borrowing would drop.
Yields for government bonds in Italy and Spain had been approaching dangerously high levels last week until European Central Bank president Mario Draghi made strong comments about taking action.
Options include rate cuts and bond buying, new long-term refinancing operations and rescue funds, with the ECB meeting looming on Thursday.
"The ECB has the capability to push bond yields down by buying bonds, they can act potentially faster than governments may be able to get things together," Mr Spooner told AAP.
"They don't require the same sort of multi-party political agreement, with lots of different countries agreeing to do something, and the market is reacting to that.
"Generally if there is further removal of risk in international financial markets the banks will benefit from that, because their cost of borrowing offshore may drop a bit and that is the driving thing."
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