- All eyes on final report by Royal Commission into banking sector
- Financial stocks surge, investors cover short positions ahead of report
- Market has priced in most of the bad news - Analyst on inquiry
- Gold stocks rise for sixth straight day
Australian shares recouped early losses on Monday as financial stocks staged a sharp recovery ahead of the final report of the Royal Commission inquiry which exposed systemic wrongdoing in the vastly profitable sector.
Following an initial short-lived drop among financials, the S&P/ASX 200 index (xjo) slipped in early trade but recovered in tandem with lenders, gaining 0.5 percent or 29 points at 5,891.80 by 0039 GMT. The benchmark was little changed on Friday.
Financial stocks .AXFJ slid as much as 0.6 percent in early trade but staged a u-turn, surging as much as 1.3 percent and on track to snap four sessions in the red.
The surprise jump came ahead of the final report from the Royal Commission due later in the day. Its investigations into reports of wrongful charges and other wrongdoing led to a massive shake-up in the sector.
"With the Royal Commission, we had a lot of the news come out on the way, and the market has pretty much priced in all of the bad news," said James McGlew, executive director of corporate stockbroking at Argonaut.
"There is also substantial short positions on these banks and people might be thinking it might be too much of a risk to keep carrying these shorts and covering them ahead of the results (Royal Commission report)... so its probably a bit of short covering before that," he added.
Also on the rise were energy stocks .AXEJ , which rose 1.4 percent, with Woodside Petroleum (WPL) and Santos Ltd (STO) firming 0.6 percent and 1.6 percent, respectively.
Upbeat U.S. jobs data and signs of a supply cut driven by U.S. sanctions on Venezuelan exports pushing oil prices by about 3 percent on Friday, boosting energy stocks.
The gold sub-index .AXGD rose for a sixth straight session, after a gain of over 7 percent in the previous week. Sector heavyweights Newcrest Mining (NCM) and St Barbara (SBM) also pegged gains.
Gold prices hit a nine month peak in the previous week, buoyed by the U.S. Federal Reserve's signal that it would pause interest rate hikes, although the precious metal posted a minor dip on Friday after strong U.S. jobs data.
Meanwhile, the materials sub-index .AXMJ edged lower and was set to snap five straight sessions of gains. The top loser on the Australian benchmark was Boral (BLD) , which hit a four-year low.
The country's largest building materials supplier said it expected core earnings for the first half of fiscal 2019 to be slightly lower than the previous year, due to delays of major projects and infrastructure.
Across the Tasman sea, New Zealand's benchmark S&P/NZX 50 index (nz50) fell 0.08 percent or 7.21 points to 8,991.96.
Dairy company Synlait Milk (SML) and Fonterra Shareholders' Fund (FSF) both slipped.
