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Australian stocks record 7-day high at end, S&P increases 18.8pts

Australian stocks record 7-day high at end, S&P increases 18.8pts

SYDNEY: The Australian stocks has finished stronger for the seventh successive day and closed the week at a four month high as assumption of a possible cut to the official interest rate on Tuesday enhanced investor emotion.

At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was up 18.8 points, or 0.34 per cent, at 5,588.3, while the broader All Ordinaries index gained 19.4 points, or 0.35 per cent, to 5,551.6.

The higher finish drove the sharemarket up 86.5 points, or 1.57 per cent for the week on expectations that the Reserve Bank of Australia will cut the already record-low cash rate of 2.5 per cent. The interest rate swaps market is currently pricing a 65 per cent chance of a cut next week.

Building on last week’s 3.8 per cent surge, the sharemarket has made a two-week rally of 5.4 per cent.

Division director for Macquarie Equities, Lucinda Chan, said while the chance of an RBA cut was boosting sentiment in the market, investors were also happy the price of oil steadied in overnight trading, helping mining and energy stocks to boom today.

Oil prices closed higher after a volatile session that saw the New York price drop below $US44 a barrel for the first time since March 2009.

“Materials and energy are stronger, with Telstra and the banks pushing heavily into the black today,” Ms Chan said.

If the RBA does make a cut to the rate, Ms Chan said the market may be in for another rally.

“Having lower oil prices and lower interest rates, there’s less pressure on household budgets meaning consumers can spend more. Businesses expand and grow with cheaper money,” Ms Chan said.

“The lower interest rate would help the equities markets — people want return on their cash and the markets are a place to get them in a low interest rate environment.”

Energy stocks rallied after steep losses in the previous session, to be 1.25 per cent higher as a sector.

Beach Energy surged 6.67 per cent to 96c, while Oil Search lifted 0.91 per cent to $7.77.

Santos gained 1.94 per cent to $7.88 while Woodside Petroleum added 1.6 per cent to $34.28.

Financial stocks were up, lifting 0.24 per cent as a sector.

ANZ lifted 0.15 per cent to $33.00, while Commonwealth Bank rallied 0.64 per cent to $89.33, after earlier reaching $90.