ASX breaks 4300 mark on strong offshore leads: Midday roundup

The Australian sharemarket has lifted through the key 4300-point barrier in early trade, on the back of strong offshore leads.

After a solid start, the S&P/ASX200 had pared gains by 11.30 AEDT to be up 0.75% to 4294.9 while the broader All Ordinaries index was up 0.7% to 4385.7.

The banks, AMP, Telstra and BHP were all higher this morning.

CHC Markets chief market analyst Ric Spooner said that investors were encouraged by US Federal Reserve chairman Ben Bernanke’s comments, which also pushed US stocks higher.

“Although US employment growth has improved significantly over the past six months it remains well below the level many consider necessary to achieve a sustained reduction in the unemployment rate at this stage of the economic cycle,” Spooner said.

$A rises on Bernanke comments

Meanwhile, the Australian dollar has risen almost one cent and pushed past $US1.05 for the first time in six days following indications from the Federal Reserve Chairman, Ben Bernanke, that the US would keep interest rates low.

This morning the Australian dollar was trading at 105.38 US cents, up from 104.48 cents on Monday.

HiFX trading director Mike Hollows said the rally came after Mr Bernanke said the US jobs market remained weak, despite three months of steady employment growth, and indicated the Fed would keep interest rates at close to zero per cent for the foreseeable future.

The comments prompted a fall in the US dollar, and rise in the Australian dollar.

Lending rates are up to the banks, RBA says

The central bank says a rise in funding costs for the major banks is only one factor in determining the increase in lending rates.

Speaking at a conference in Sydney, RBA assistant governor for financial markets, Guy Debelle said the RBA could check the pressure private banks were under, but not necessarily how this would manifest itself in bank lending rates.

“We can estimate what’s happening with funding costs with a reasonable degree of accuracy,” he said.

“The idea that a particular quantum of change in funding costs automatically maps through to a change in lending rates is also not right – it presumes there’s some magical predetermined … margin for the banking system which is always being maintained.”

Leighton in trading halt

Leighton Holdings has been placed in a trading halt, ahead of a quarterly review from the group which it says may impact its earnings guidance.

The construction group will remain in the halt until the announcement or until the beginning of trading on March 29.

Leighton said the halt came on the back of information emerging from its quarterly reviews and the impact that could have on the earnings guidance it gave in February.

“The trading halt is necessary for Leighton to make an announcement to the market in relation to any revisions to previous guidance having regard to information emerging out of the quarterly reviews which are currently in progress including, in relation to, the financial performance of the Airport Link Project,” it said.

James Hardie to make payment into asbestos fund after tax win

Meanwhile, building products company James Hardie is set to pay $132.3 million into a compensation fund for asbestos victims after winning a battle against the ATO recently.

James Hardie said today it would repay $21 million it had borrowed from the NSW and federal governments, fresh from its High Court win against the tax office.

“James Hardie believes that the early receipt of this contribution will be of considerable benefit to the AICF,” the company said, referring to the Asbestos Injuries Compensation Fund, established years ago to compensate victims of asbestos-related disease.