Big lenders lead ASX higher after decision

Photo / Getty Images

Stronger bank stocks led the Australian share market higher after the central bank lifted interest rates.

The benchmark S&P/ASX200 index closed up 2.9 points, or 0.06 per cent, at 4701.4, while the broader All Ordinaries index had gained 2.4 points, or 0.05 per cent, to 4773.3 points.

On the ASX24, the December share price index futures contract was up three points at 4703, with 21,106 contracts traded.

Commonwealth Bank led the gains made by most of the big banks following the Reserve Bank of Australia's decision, which lifted the cash rate by 25 basis points to 4.75 per cent at its November board meeting yesterday.

Speculation for an increase actually eased last week after official figures showed lower than expected inflation for the September quarter.

Commonwealth finished up 88c, or 1.78 per cent, at A$50.19. It announced before the market closed that it had lifted its variable home loan interest rate by 0.45 basis points to 7.81 per cent - higher than the cash rate rise.

Bell Potter senior adviser Stuart Smith said the banks were the driving force behind the market after a very quiet Melbourne Cup day.

"They're mulling over whether they can raise mortgage rates," Smith said.

"We'll see the answer tonight or in the morning's paper."

Westpac, ANZ and National Australia Bank have yet to make statements.

Westpac finished up 26c, or 1.13 per cent, at A$23.31, and ANZ closed 13c higher at A$25.03, while National Australia Bank ended 1c lower at A$25.88.

- AAP