Australia Bank Stocks Push Market Up Ahead Of Rate Decision

Australian stocks opened sharply higher Tuesday, with the big banks again in focus as the S&P/ASX 200 rose 1.1% in the first 20 minutes of trade. While the Reserve Bank of Australia's policy decision later in the day held the potential to move the financial shares, initial action was dominated by investors reacting to Australia & New Zealand Banking Group earnings. Shares of ANZ rallied 3.9% after its cash profit came in slightly above forecasts, with the result boosting the other Big Four banks, just as the result from Westpac Banking Corp. dragged on the stocks a day earlier. Commonwealth Bank of Australia rose 1.3%, National Australia Bank Ltd. added 1.5%, and Westpac rebounded with a 0.6% gain. The moves came amid expectations for an interest-rate cut Tuesday, with Reuters saying debt-market pricing implied a 3 out of 4 chance the RBA would lower the cash rate to a record-low 2%. Also supporting the market was an overnight climb for iron ore, with the benchmark spot price reported more than 1% higher. As a result, Fortescue Metals Group Ltd. rose 2.2%, Arrium Ltd. advanced 2.6%, BC Iron Ltd. improved by 2%, and Mt. Gibson Iron Ltd. jumped 4.6%. Rio Tinto Ltd. saw a more modest gain of 0.4%, while BHP Billiton Ltd. lost 0.8% after Standard & Poor's warned of a possible downgrade to the miner's credit rating, and Morningstar analysts cut their assessment of the shares to hold from accumulate.