Australian shares rose on Monday, with broad-based gains led by defensives and energy stocks, after the Australian government offered a solid, if not stellar, financial outlook and two rating agencies affirmed their triple-A ratings.
Rating agency Fitch, noting Australia's government forecast a A$10 bln deterioration in its budget deficit over the next four years, but still hoped to manage a surplus by 2020/21, said Australia was still consistent with a triple-A rating.
That view was followed some time later by the Moody's rating agency. Standard and Poors had not commented by 0225 gmt.
There was significant investor concern over reports that earlier suggested Australia may be downgraded from its top credit rating.
"It (the Fitch rating affirmation) is probably going to give a minor confidence boost to the markets. I guess they (investors) would be looking out for what Moody's and S&P have to say," said Ric Spooner, chief market strategist with CMC Markets.
The S&P/ASX 200 index (xjo) was 0.7 percent, or 39.17 points, higher at 5,572.1 at 0221 GMT.
The U.S. Federal Reserve tightening monetary policy and suggesting a more vigorous rate rise cycle for next year had dampened market spirit last week, sending the benchmark 0.5 percent lower on the week.
Aussie stocks, otherwise, have been in line with a global inflation rally that was triggered in October.
Defensives, considered a safe bet during periods of uncertainty, steered the rally. Utilities, telcos and healthcare stocks were the biggest gaining sectors.
Natural gas infrastructure business APA Group (APA), up 2.4 percent, received support from higher oil prices. [O/R]
Oil major Woodside Petroleum (WPL) was 0.8 percent higher, while Oil Search Ltd (OSH) and Santos Ltd (STO) each added about 0.6 percent.
Financial stocks, often the reapers of reflation trade, posted gains with the financial index .AXFJ 0.3 percent higher. The "Big Four" major banks gained in the range of 0.1 to 0.5 percent.
Basic materials, undeterred by the 14-year dollar high, jumped on to the bandwagon. Major miners Rio Tinto (RIO) and BHP Billiton (BHP) were over 1 percent higher. [IRONORE/] [MET/L] [FRX/] <.DXY>
New Zealand's benchmark S&P/NZX 50 index (nz50) was 0.5 percent higher at 6,791.55 led by defensives and consumer stocks.
Bank of New Zealand-Business NZ's performance of services index (PSI) showed 1.3-point growth New Zealand's services sector in November to 57.9, making November one of the strongest months of activity in 2016. Meanwhile, a a Westpac survey showed consumer confidence rising 5.2 percent in the fourth quarter.
Building materials manufacturer Fletcher Building (FBU) and SKY Network Television Ltd (SKT) were each 1.7 percent higher.
Infrastructure firm Infratil (IFT) and electricity generator Genesis Energy (GNE) were the biggest gainers on the benchmark, adding 3.5 percent and 2.5 percent respectively.
