Shares on the ASX had their best day since late November, as the heavyweight sectors and dollar were boosted by better employment and budget reports.
The S&P/ASX200 benchmark index closed higher by 77.5 points, or 1.16 per cent, to 6756.7 on Thursday, after mixed results in US trade.
The gain was the best since November 24.
The closing position was the highest for the index since February 25.
The All Ordinaries closed better by 83.4 points, or 1.21 per cent, to 7000.1.
The materials sector, which includes miners, added 1.6 per cent as iron ore prices remained above $US150 a tonne.
Financials climbed 1.08 per cent.
There were helpful contributions from energy, up two per cent, and information technology, which gained 3.34 per cent.
Investor optimism was helped by the unemployment rate falling to 6.8 per cent in November as a larger-than-expected 90,000 people joined the workforce.
Economists had forecast a 40,000 rise in employment and jobless rate of seven per cent.
A stronger than expected recovery from the COVID-19 recession has helped to wipe billions of dollars from the federal budget deficit.
The mid-year economic review showed the deficit for the 2020/21 financial year is forecast to be $197.7 billion, rather than the $213.7 billion from October’s delayed budget.
The Aussie dollar had spikes towards 76 US cents after both sets of figures were published.
Westpac’s head of foreign exchange Richard Franulovich said the improvement came as the US dollar was down across the board.
“The broader environment is a negative one and the Aussie is making hay,” he said.
Australian government bond yields edged higher and Mr Franulovich said investors were reappraising Australia’s economic recovery.
Deep Data Analytics chief executive Mathan Somasundaram doubted the jobs data and budget update meant much to shares investors.
He believed the JobKeeper wage subsidy masked the reality of employment.
He said the ASX rise was influenced by it being the day of the month when options expired for futures trading.
Traders set new index levels, which produced substantial moves in trade, he said.
“People are taking a guess on where the market will be,” Mr Somasundaram said.
On the ASX, Fortescue was best of the big miners and closed up 2.0 per cent to $22.41.
In banking, ANZ was best of the big four. Shares closed up 1.29 per cent to $23.58.
Freedom Foods sold its cereals and snacks operations to Arnott’s for $20 million as it focuses efforts on dairy, nutritional and drink products.
Freedom said the sale included brands Arnold’s Farm, Barley+, Freedom Foods, Heritage Mill and Messy Monkeys.
Arnott’s will also gain manufacturing sites in Darlington Point and Leeton in NSW, and in Dandenong in Victoria.
Freedom shares were in a trading halt.
Casino giant Crown Resorts will face a review of its Melbourne casino after being criticised in a NSW inquiry.
The Victorian government requested its gambling regulator bring forward Crown’s review, after its last evaluation in 2018.
Shares closed up 0.2 per cent to $9.87.
A2 Milk had its shares in a trading halt after it said it needed to revise its earnings guidance.
Shares last traded lower by less than one per cent to $13.28.
Earlier on Wall Street, markets had mixed results but investors remained optimistic US politicians could deliver economic stimulus.
On Friday, the National Australia Bank will have its annual general meeting.
Resources and agricultural equipment provider Incitec Pivot will also have its annual meeting with shareholders.
The Aussie dollar was buying 75.93 US cents at 1723 AEDT, higher from 75.58 US cents at Wednesday’s close.
ON THE ASX
* The S&P/ASX200 benchmark index closed higher by 77.5 points, or 1.16 per cent, to 6756.7 on Thursday.
* The All Ordinaries closed better by 83.4 points, or 1.21 per cent, to 7000.1.
* At 1723 AEDT, the SPI200 futures index was unchanged at 6692.
One Australian dollar buys:
* 75.93 US cents, from 75.58 cents on Wednesday
* 78.43 Japanese yen, from 78.22 yen
* 62.09 Euro cents, from 62.11 cents
* 55.99 British pence, from 56.13 pence
* 106.40 NZ cents, from 106.39 cents.