Australian shares were led higher today by Telstra, as the market recovered from yesterday’s steep falls, but trading was mostly subdued hours ahead of the federal budget.
At the close, the benchmark S&P/ASX200 index was up 13.0 points, or 0.3 per cent, at 4314.3, while the broader All Ordinaries index had risen 14.3 points, or 0.3 per cent, to 4375.9.
Among the sectors, materials slipped 0.1 per cent, gold fell 1.1 per cent, but financials and energy both rose 0.2 per cent, while consumer discretionary gained 1.2 per cent and telcos rose 1.6 per cent.
Treasurer Wayne Swan is expected to deliver a budget surplus of $1.5 billion at 7.30pm today. Spending cuts will likely be accompanied by cash payments for the low paid to help avoid the kind of anti-austerity backlash that saw voters in France and Greece abandon ruling parties at weekend elections.
"The budget is expected to confirm a further tightening of fiscal policy to achieve a 2012-13 surplus, effectively placing a greater burden on the RBA to support growth," said Stan Shamu, market strategist at IG Markets.
Shares yesterday suffered their sharpest daily decline this year, on fears the French and Greek election results could derail the collective response to the eurozone debt crisis.
However, resilient performances from Wall Street and European stock markets overnight managed to support the local market today.
"Across Asia, markets have stabilised after yesterday's sharp sell-off. However, there is still a lot of caution with some investors remaining sceptical over the Greece situation," Mr Shamu said.
Gains led by Telstra
Telstra was the market's biggest driver, contributing more than 3 points to the ASX200's rise. The telco's shares gained 6 cents, or 1.7 per cent, to $3.62 as investors sought high-yielding stocks.
Construction giant Leighton Holdings was 23 cents lower at $19.02 as it reconfirmed its profit guidance after announcing that the completion of its Brisbane Airport Link would be delayed.
Property Trust Centro Retail Australia was in a trading halt pending an announcement on settlement discussions over its $200 million class action. Centro Retail Australia last traded at $1.8475.
In the resources sector, global miner BHP Billiton was up 11 cents at $34.68, and Rio Tinto was 26 cents higher at $62.26.
Mineral sands miner Iluka dumped $1.94, or 12.2 per cent, to $14.01 after it said it would cut its annual production of zircon in 2012 because the global economic outlook remained unclear.
Steelmaker OneSteel dipped 4.5 cents to $1.18 as shareholders voted in favour of changing the company name to Arrium. Oil Search was 2 cents richer at $7.14 after it said 2012 would be a potentially transformational year for the company, presenting an unprecedented opportunity to grow the value of its assets.
Among the major banks, the Commonwealth Bank firmed 2 cents to $52.08 as it cut interest rates on its one- and three-year fixed home loans by up to 0.34 percentage points. Westpac was up 11 cents at $22.83, ANZ nudged up 1 cent to $23.11, and National Australia Bank sagged 8 cents to $24.63.
In the US, Wall Street indices had closed slightly lower, showing little impact from the weekend election results in France and Greece which cast doubt on the path of financial reform across the troubled eurozone. Most European stock markets closed higher despite the prospects for political and financial turmoil in Greece following its poll.
CMC Markets chief market analyst Ric Spooner said concerns about France may have been misplaced because French president-elect Francois Hollande may turn out to be no worse on economic policy than his predecessor.
However, there was still much uncertainty about Greece, where it was likely that whatever government emerged there would be opposed to austerity measures.
BusinessDay, with wires