Market sentiment must be pretty thin when a ploy of state opposition to block a key tax measure (admittedly it is South Australia’s controversial state bank tax) is nominated as the cause of yesterday’s 1.7%, $30 billion surge in the ASX 200.
The surge in Australia came despite a drop across Asia, especially in Hong Kong.
The tax will only cost the banks $370 million over four years and the Liberal Party opposition’s decision to oppose the tax won’t make much difference if the ALP state government can marshall the numbers to push its budget through.
That though remains an unknown and investors took the opposition’s opposition as a positive and boosted the shares of major banks.
As a result (and a surge in retail shares after solid retail sales data for May) saw the ASX 200 Index and the All Ordinaries Index up 1.7% and 1.6%, to 5783.8 points and 5819.6 points respectively.
Yesterday’s rally came after the ASX experienced its worst day of 2017 on Friday, followed by more losses on Monday
The Reserve Bank’s announcement that it would keep interest rates at 1.5% did little to interrupt the euphoria, though the Aussie dollar dropped more than three quarters of a US cent.
CBA shares jumped 1.9%, NAB shares were up 2.8%, Westpac enjoyed a 3.3% lift and ANZ shares ended the day up 2.2%. Macquarie Group shares were up 1.6%.
Regional banks also enjoyed Tuesday’s positive mood, with shares in Bendigo Bank up 2.9% while Bank of Queensland closed 2.3% higher.
