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CBA rebound and commodities help lift ASX

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Published on: Monday, August 07, 2017

The Australian share market has closed higher after the embattled Commonwealth Bank regained some lost ground, prices for iron ore and oil lifted, and better-than-expected jobs data out of the US boosted Wall Street over the weekend.

The benchmark S&P/ASX200 index closed up 0.9 per cent at 5,773.6 points on Monday, helped by a solid recovery from embattled market heavyweight Commonwealth Bank.

ASR Wealth Advisors client adviser Gary Huxtable said there were several drivers behind the market’s lift, citing a rise in the iron ore price and a 209,000 rise in jobs in US non-farm payrolls data late on Friday night

Also helping was CBA’s response to the money laundering laws breach case brought against the bank by regulator AUSTRAC last Thursday.

“When you’ve got positive sentiment towards the miners, positive sentiment towards the banks, and you’ve got a fairly decent offshore lead coming in, you have all the right ingredients for what’s been a pretty solid day,” Mr Huxtable said.

Mr Huxtable said investors were looking for something to drive the market past the 5,800-points mark, and that could come when the Commonwealth Bank reports its financial results on Wednesday.

Shares in the Commonwealth Bank had been hit hard on Friday, dropping 3.9 per cent following the launch of court proceedings against the bank by the federal government’s financial intelligence unit, AUSTRAC.

AUSTRAC alleges that the bank has systematically breached anti-money laundering and counter-terrorism financing laws.

On Monday CBA said it was taking the allegations of more than 53,000 breaches “seriously” but suggested that the breaches could all be considered to arise from one course of conduct – an IT flaw in its intelligent cash machines.

Such an approach in court could drastically reduce any potential penalty in the event of an adverse finding.

Commonwealth Bank rose 80 cents, or nearly one per cent, to $81.52.

Among the other big banks, Westpac added 1.3 per cent, National Australia Bank gained 0.8 per cent, and the ANZ improved 1.1 per cent.

Energy stocks gained after the stronger-than-expected US jobs report stoked hopes for growing energy demand and lifted oil prices.

Woodside Petroleum advanced 1.3 per cent to $29.42 and Santos surged 4.2 per cent to $3.47.

The major miners all improved following a lift in iron ore prices.

BHP Billiton gained 1.7 per cent to $26.16, Rio Tinto climbed 1.7 per cent to $66.35 and Fortescue Metals jumped 2.8 per cent to $5.87.

Meanwhile, the Australian dollar has fallen from its Friday high of 79.80 US cents after the US jobs data bolstered the greenback.

The Aussie was trading at 79.24 US cents at 1700 AEST on Monday, from 79.68 US cents on Friday.

ON THE ASX:

* The benchmark S&P/ASX200 closed up 53 points, or 0.93 per cent, at 5,773.6 points.

* The broader All Ordinaries index was up 51.2 points, or 0.89 per cent, at 5,824.5 points.

* The September SPI200 futures contract was up 46 points or 0.81 per cent at 5,706 points.

* National turnover was 2.5 billion securities traded worth $4.3 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

One Australian dollar buys:

* 79.24 US cents, from 79.68 on Friday

* 87.769 Japanese yen, from 87.70 yen

* 67.25 euro cents, from 67.04 euro cents

* 60.75 British pence, from 60.63 pence

* 107.33 NZ cents, from 107.18 cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,257.43 per fine ounce, from $US1,258.60 per fine ounce on Friday.

BONDS:

Sydney Futures Exchange prices:

* August 2017 10-year bond futures contract at 97.36 (implying a yield of 2.64pct), from 97.38 (2.62pct) on Friday

* August 2017 3-year bond futures contract at 98.06 (1.94pct), from 98.07 (1.93pct).

*Note: No trade in Commonwealth Government Securities due to NSW Bank Holiday.

(*Bond market closes taken at 1630 AEST previous local session)


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