WSJ:Australia Shares End up 0.2% After Aussie Dollar Fall
By David Rogers
SYDNEY--The Australian share market rose for a third-consecutive session on Tuesday after the Australian dollar weakened further overnight. Non-resources companies with U.S. dollar income remained in demand, although commodity price falls restrained the resources sector.
The benchmark S&P/ASX 200 closed up 0.2% at 5221.0 points after rising to 5227.1.
The index was up 12% year to date, versus a 15% rise in the S&P 500.
Share-trading volume shrank to 5.0 billion Australian dollars (US$5.0 billion) from A$5.4 billion on Monday as investors awaited the Federal Budget, which was to be announced by Treasurer Wayne Swann at 0930 GMT.
With the U.S. dollar surging to a 4 1/2 year high against the Japanese yen overnight, the Australian dollar hit a fresh 11-month low versus the greenback, helping sustain a theme that helped push the Australian share market to a five-year high of 5242.5 last week.
"We have the backdrop of the weaker Aussie flowing through to U.S. dollar earners, although weaker commodity prices are keeping the resources names in check," said IG market strategist Stan Shamu. "That's the major theme and I think everyone is still repositioning themselves for a stronger U.S. dollar."
Among Australia's major beneficiaries of a weaker exchange rate, CSL, News Corp., QBE Insurance, Brambles and Amcor rose 1.2%-3.1%.
QBE hit a more-than 1.5-year high as analysts said conditions for its U.S. business improved. Deutsche Bank raised its price target on Australia's largest insurer to A$16.25 from A$15.06. Analyst Kieren Chidgey said that U.S. commercial insurers' recent results point to 5%-10% premium rises in the first quarter of 2013, making QBE's target to raise its real-estate premiums 5% this fiscal year look "increasingly achievable."
Among declining shares, Newcrest Mining, Fortescue Metals and Atlas Iron fell 2.4%-4.2% after spot iron ore slipped 0.2% and spot gold fell 1.2% on Monday.
Deutsche Bank cut its ratings on Newcrest, Resolute and Evolution Mining, after lowering its gold price forecasts overnight.
However, Rio Tinto slipped just 0.1% and BHP Billiton rose 0.4% after London Metals Exchange copper rose 0.6% in offshore trading.
High-yield stocks mostly underperformed, with ANZ, Westpac, National Australia Bank and Telstra down 0.2%-0.6%, although Commonwealth Bank of Australia rose 1.3% before Wednesday's third-quarter trading update.
