Local shares closed higher yesterday, 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 today.
The stockmarket was buoyed by growing confidence over the state of the US economy after a stronger than expected monthly US jobs report. The figures on Friday sparked another record-breaking session on Wall Street.
The benchmark S&P/ASX 200 closed up 0.5 per cent at 5156.2 after an early jump to 5201.3.
While investor appetite for risk assets, such as stocks and commodities, was whetted by the strong US 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 on Friday showed just two expecting the RBA to cut interest rates this week.
There were, however, increasing expectations for the central bank to cut rates next month if it keeps them on hold this month, Mr Lucas said.
Resources companies led the market higher throughout yesterday's trading.
Karoon Gas 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, closed up 23 per cent. At their session high, they were up 28 per cent at $5.12, the stock's highest value since early last month.
The nation's largest resources companies, BHP Billiton and Rio Tinto, were stronger on the back of broadly higher commodity prices. They closed up 2.8 per cent and 3.1 per cent, respectively.
Fortescue Metals, the world's fourth-largest iron ore miner, jumped 5.8 per cent despite a 1 per cent dip in the iron ore price as the company celebrated the opening of its Firetail mine in Western Australia.
Rare-earths producer Lynas, meanwhile, climbed 16 per cent to its highest level in more than a month.
The stock rallied after Malaysia's Prime Minister, Najib Razak, on Sunday won a tightly fought election, alleviating concerns that a new government could suspend the miner's licence there for its controversial Kuantan processing plant.
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 closing down 1.7 per cent and Myer ending the day down 0.7 per cent.
Share prices for the bourse's financial stocks drifted lower, with trading volumes well below their average volumes, IG's Mr Lucas said.
National Australia Bank closed 0.7 per cent lower, while Westpac ended down 1.1 per cent.
The Australian dollar meanwhile remained higher after receiving a boost from better US employment figures. The local unit was trading at US102.72c by late yesterday afternoon, up from US102.54c on Friday.
CMC Markets senior trader Tim Waterer said the US figures were warmly received by Asian markets yesterday morning.
"The US jobs data gave the global growth landscape a more convincing appearance, commodities received renewed buying interest and this is reflected in the performance of resource stocks," Mr Waterer said.
