asx boosted by higher prices for iron ore and crude oil 1787842015
Investors are unaffected by data on Australia’s terms of trade, which fell by the most since the GFC
Australian stocks surge higher right at the open on Thursday and kept up their bullish uptrend right through the session, closing near the best levels of the day.
A jump in iron ore prices, likely indicating a resumption of an uptrend in the steelmaking material boosted stocks in the mining sector. Crude oil prices jumped higher on news of lower US crude stockpiles. This lit up stocks in the energy sector, the top performer yesterday.
Investors were also encouraged by the apparent stability in the Chinese stock markets, as well as the positive overnight close on Wall Street, and disregarded gloomy domestic economic data on Australia’s terms of trade and building approvals.
Indices and sectors
The benchmark S&P/ASX 200 rose 45.3 points, or 0.8 per cent, and closed at 5,669.5, while the broader All Ordinaries index was up 43.5 points, or 0.8 per cent, at 5,653.1.
The top gaining sectors were energy (+2.20 per cent), consumer staples (+1.97 per cent), utilities (+1.85 per cent), information technology (+1.21 per cent) and materials (+1.19 per cent). Healthcare (-0.62 per cent) and real estate investment trusts (-0.24 per cent) were the only two losing sectors.
Stocks
The mining sector did well for the second consecutive session, as iron ore prices surged yet again and closed yesterday at nearly US$56 a tonne. BHP Billiton Limited (ASX:BHP) and Rio Tinto Limited (ASX:RIO) both surged higher by 2.36 per cent to close at AU$26.50 and AU$53.00 respectively. Fortescue Metals Group Limited (ASX:FMG) was up 0.80 per cent to AU$1.89 and Atlas Iron Limited (ASX:AGO) gained 6.06 per cent to AU$0.035. Uranium miner Paladin Energy Ltd (ASX:PDN) moved up nearly 10 per cent to AU$0.225 and was among the top gainers on the S&P/ASX 200 after the company said it would take action to reduce cash costs so that it becomes cash flow positive by 2016, even at the prevailing low uranium prices.
Stocks in the energy sector ended sharply higher. Woodside Petroleum Limited (ASX:WPL) shot up 2.09 per cent to AU$35.68, Origin Energy Ltd (ASX:ORG) gained 1.70 per cent to AU$11.35, Oil Search Limited (ASX:OSH) advanced 2.19 per cent to AU$7.47 and Santos Ltd (ASX:STO) vaulted 4.21 per cent to AU$7.43. Karoon Gas Australia Limited (ASX:KAR) jumped 8.29 per cent to AU$2.35 and was one of the top gainers on the S&P/ASX 200.
Banks gained across the board. Commonwealth Bank of Australia (ASX:CBA) was up 0.55 per cent to AU$87.08, Westpac Banking Corp (ASX:WBC) gained 0.99 per cent to AU$34.74, Australia and New Zealand Banking Group (ASX:ANZ) moved up 0.68 per cent to AU$32.47 and National Australia Bank Ltd. (ASX:NAB) gained 1.14 per cent to AU$34.56.
Supermarkets had a particularly good day yesterday. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, surged 1.56 per cent to AU$42.34, Woolworths Limited (ASX:WOW) was up nearly 3 per cent to AU$28.63, Caltex Australia Limited (ASX:CTX) jumped 0.96 per cent to AU$34.64, Metcash Limited (ASX:MTS) was up 2.70 per cent to AU$1.14 and Myer Holdings Ltd (ASX:MYR) gained 1.64 per cent to AU$1.24. Appliance and consumer products maker GUD Holdings Limited (ASX:GUD) was the top gainer on the S&P/ASX 200, up 10.87 per cent to AU$9.38, after the company reported better-than-expected figures for net profit and sales during the year ended June 30.
Airlines however were on the defensive. Qantas Airways Limited (ASX:QAN) dropped 1.58 per cent to AU$3.74 and Virgin Australia Holdings Ltd (ASX:VAH) slipped 3.33 per cent to AU$0.435.
Economic news, currency and market outlook
Data from the Australian Bureau of Statistics released Thursday showed that the country’s terms of trade during the June quarter plunged sharply by about 5.8 per cent from the previous quarter, the most witnessed since the global financial crisis, amidst slumping prices from key exports such as iron ore, coal and energy. According to the Australian Financial Review, the latest report shows the nation is in its fifth consecutive quarter of an income recession.
Meanwhile, the bureau also reported data which showed that building approvals slumped 8.2 per cent during June, far worse than the expected 0.8 per cent from a survey of economists by Reuters. Only 7,887 attached dwellings were approved, down 20.4 per cent, a reflection on the volatile apartment sector. However, detached houses showed a 4.3 per cent rise in approvals to 9,661, according to ABC.
On Wall Street, US stocks ended almost unchanged after data showed the US economy has yet to fully recover from a weak start to the year. The Commerce Department said that US economic output in the second quarter expanded at an annual rate of 2.3 per cent, worse than expectations of 2.7 per cent. At the closing bell, the Dow Jones Industrial Average slipped 5 points, or less than 0.1 per cent, to 17,746. The S&P 500 ended steady at 2,109, while the Nasdaq Composite Index rose 17 points, or 0.3 per cent, to 5,129.
The Australian dollar slumped to yet another six-year low following a rally in the US dollar on the back of GDP data. At 07:00 this morning (AEST) the local currency was trading at 72.91 US cents, down from 73.01 US cents on Thursday.
The Australian stock market is likely to open higher today given that at 06:45 am (AEST) this morning, the September ASX SPI200 Index (AP) Futures was up 10 points at 5,624.
