The Australian share market’s rise to a fresh 10-month high on Monday was erased by a fall in Asian share markets, leaving traders wary of profit taking after sharp gains in the Australian market since March.

Banks sustained their gains on the back of a positive trading update from Australia and New Zealand Banking Group, while resources succumbed to falls in Chinese and Japanese equity markets.

The benchmark S&P/ASX 200 closed down 10.5 points or 0.2% at 4479.1 after hitting 4537.2 in early trading.

The index was up 43% from its March low and 21% above its July low, thanks to signs of global economic recovery and a better-than-expected Australian earnings period.

It rose 5.5% in August, notching up its sixth-consecutive monthly gain.

Australian economy shines

The Australian economy may be faring better than most, but the global economic crisis is hitting profits and wages hard

The slump in profits and wages is sizeable. Company profits fell by 7.8 per cent in the three months to June, Mark, to be almost 15 per cent lower than a year ago and wages fell by 1.1 per cent, they’ve fallen now for the past six months wages and it’s very unusual for wages to actually be going backwards.
It was a tale of different sectors however; you had a big fall in mining profits with the cuts to commodity prices, you had slight falls in profits in wholesale trade and construction as margins got squeezed, but in the retail sector, profits were up nearly nine per cent in the quarter and up more than 20 per cent on a year ago, so the retail sector, thanks to the government stimulus has had a boom.

Chinese stocks helped drive the main index of Asia-Pacific stocks (excluding Japan) to an 11 month high, as two surveys showed accelerating Chinese factory output growth. Car and tyre makers were among the biggest winners, after the US Government announced increased funding for its "cash for clunkers" program to encourage households to trade up to more fuel efficient vehicles.

• In Tokyo, the Nikkei finished flat at 10,352.
• Hong Kong’s Hang Seng was up 1 per cent at 5:38pm (AEST).
• Mainland China’s Shanghai composite index gained 1.5 per cent to 3,463, its highest level since March last year.
• Singapore’s main share index was flat at 2,659.

Currency markets

The resurgence is due to increased optimism about a global economic recovery, and demand for currencies linked to commodities. At 5:53pm the Australian dollar was fetching:

• 83.60 US cents
• 79.41 Japanese yen
• 58.80 euro cents
• 49.96 British pence
• 1.2612 New Zealand dollars

Major movers in Australian market

The Australian share market has extended its rally, rising 0.5 per cent on the back of another strong showing by the banks.

At the close, the S&P/ASX 200 was 19.4 points higher, or by 0.5 per cent, at 4263.4 while the broader All Ordinaries rose 21 points, or 0.5 per cent, to 4270.5 points.

• ANZ and NAB led the charge of the big banks, with both up 2.5 per cent, and CBA and Westpac both up by just under 2 per cent. The banks have benefited from broker upgrades as the wave of economic optimism has led analysts to upgrade their profit forecasts. The ANZ also gained after sources told several media outlets that ANZ is close to a deal worth around $1 billion to purchase some of RBS’ Asian assets.
• Aquarius Platinum was amongst the best gaining miners, surging 8 per cent on a broker upgrade.
• Wheat exporter GrainCorp jumped 6.7 per cent to $8.00 after it raised its profit forecast for a second time. Competitor AWB also gained 4.2 per cent on the news.
• Sino Gold picked up 2.8 per cent on the discovery of gold mineralisation near its White Mountain mine in China.

Westpac slashes bank fees

Consumers have scored another victory in the battle against exorbitant bank charges when the Westpac group announcing plans to cut a range of penalty fees from as much as $40 to just $9.

The decision by Westpac and St George – the NSW-based bank it bought last year – follows a move last week by their big four rival, National Australia Bank, to axe the entire overdraft fee of $30 on accounts used by 700,000 personal customers from October 1

KUDOS to NAB FOR BEING THE FIRST BANK TO ACTUALLY CARE.. The rest will follow just to be competitive

Westpac said it would reduce "exception” fees across credit cards and personal and business accounts to $9 from current levels of up to $45. The move includes Westpac subsidiary St George Bank.

Major oil stocks were also mixed, with Oil Search losing one cent to $5.63, Santos up 18 cents at $14.70 and Woodside Petroleum dropping 80 cents, or 1.8 per cent, to $44.90.

Gold miners had mixed fortunes, with Lihir Gold easing 3 cents to $2.74, dual-listed Newmont Mining jumping 16 cents to $4.96 and Newcrest Mining steady at $30.00.

The banks were the biggest losers, dragging the market down with them.

Commonwealth Bank fell 60 cents to $28.60, Westpac declined 12 cents to $16.64, and ANZ retreated 11 cents to $15.07.

NAB fell 17 cents to $20.23 as it hosed down speculation that new chief executive Cameron Clyne may offload the bank's UK assets.

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"The resources sector is leading the way and stocks like Woodside and Rio are doing very well," Mr Heffernan said. It was a good start to the new year.

Woodside Petroleum was up 96 cents, or 2.62%, at $37.66, Santos advanced eleven cents, or 0.74%, to $14.98 but Oil Search fell four cents to $4.61.

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