Banks, travel stocks boost Australian share market; RBA & RBNZ to

The Australian share market has opened sharply higher, following gains on Wall Street on Friday.

By 10:50am AEDT, the ASX 200 was 1.4 per cent higher at 7.287 points, after dropping last week.

The Australian dollar had gained a quarter of a per cent against the greenback, to buy around 72.75 US cents.

All sectors of the share market were on the rise in early trade, lead by education, financials and industrials.

Travel stocks were making strong gains, with Flight Centre (+5.6pc) the top-performing stock among the top 200, followed by Webjet (+5pc), as COVID reopenings in several states draw nearer and the government commits to reopen international borders in November.

Shares in furniture retailer Nick Scali climbed 10.4 per cent after announcing it would buy Plush-Think Sofas for $103 million. 

Nick Scali said the acquisition would increase its number of showrooms across Australia and New Zealand to 108.

The company will fund the Plush purchase through a combination of existing cash and new debt, after it doubled its profit last financial year as people updated their decor during the pandemic.

Bank stocks helped lift the broader market, with Commonwealth Bank up 4.7 per cent after completing a $6 billion share buy-back.

CBA bought back around 3.8 per cent of its shares on issue.

Two very different central bank meetings

Both the Reserve Bank of Australia and the Reserve Bank of New Zealand will meet this week, but far more action is expected across the ditch.

After last month postponing a widely-forecast rate hike due to a new COVID outbreak, markets consider a rate rise by the RBNZ as a near-certainty.

“As of Friday, the market was pricing an almost 90 per cent chance of a 25 basis point hike,” NAB senior interest rate strategist Nick Smyth said.

“News yesterday that most of Waikato would enter a snap five-day lockdown, after the discovery of two new cases in the region, is unlikely to shake this consensus since the RBNZ has been clear that lockdowns won’t necessarily prevent rate hikes and an October hike has been strongly signalled. “

While a rate rise in Australia is tipped to be a few years away yet, with the RBA sticking to its 2024 timeline, there will be interest in any commentary from the central bank on the housing market on Tuesday and on Friday.

“Given the current focus on macro-prudential policy, the Financial Stability Review (FSR) on 8 October will be particularly interesting,” ANZ economists said.

“The RBA statement on Tuesday will likely flag some of the key conclusions of the FSR….