energy and banking stocks lead the spasx 200 to a positive close 2505122015

The Australian share market recovered sharply from losses in the opening hour of trade on Thursday, and remained in an uptrend for the rest of the session.

In volatile trading, the benchmark S&P/ASX 200 finally closed just a hair below 5,264.70, its best level of the day.

Gains were spearheaded by an energy sectors galvanised by a buyout offer for Santos, and banking, where Commonwealth Bank of Australia (ASX:CBA) followed on the heels of Westpac Banking Corp (ASX:WBC) and hiked interest rates on home loans.

Indices and sectors

The benchmark S&P/ASX 200 rose 15.5 points, or 0.3 per cent, and closed at 5,263.8, while the broader All Ordinaries index was up 13.1 points, or 0.2 per cent, at 5,299.6.

The top gaining sectors included energy (+3.01 per cent), utilities (+1.16 per cent), real estate investment trusts (+0.98 per cent), healthcare (+0.53 per cent) and financials (+0.47 per cent). The main losing sectors were consumer discretionary (-0.98 per cent), industrials (-0.54 per cent), materials (-0.37 per cent) and information technology (-0.31 per cent).

Stocks

Energy was the top performing sector yesterday, with Santos Ltd (ASX:STO) being in the limelight for a buyout offer. The stock surged 16.18 per cent to AU$6.32 on news that a syndicate of ultra-wealthy investors, including Middle East and Asian ruling families, had made a AU$7.1 billion offer to take over the struggling oil and gas producer. According to the ABC, Santos rebuffed the offer on grounds that it was "opportunistic in nature and did not reflect the fair underlying asset value of the company".

Santos Ltd (ASX:STO) was the top performer on the ASX 200. But other energy counters benefited from the boost in sentiment. Oil Search Limited (ASX:OSH) was up 1.64 per cent to AU$7.44, and Woodside Petroleum Limited (ASX:WPL) gained 0.81 per cent to AU$30.95. Karoon Gas Australia Limited (ASX:KAR) surged 7.65 per cent to AU$2.04, Beach Energy Ltd (ASX:BPT) shot up 3.91 per cent to AU$0.67, while Origin Energy Ltd (ASX:ORG) shot up 5.71 per cent to AU$5.92, with the latter three figuring among the top gainers on the S&P/ASX 200.

Mining shares closed mostly down, with the exception of Fortescue Metals Group Limited (ASX:FMG) which was up marginally by 0.40 per cent to AU$2.50. BHP Billiton Limited (ASX:BHP) was lower by 0.54 per cent at AU$24.10, Rio Tinto Limited (ASX:RIO) fell 0.23 per cent to AU$52.66 and Atlas Iron Limited (ASX:AGO) was down over 3 per cent to AU$0.03. Iron ore prices have been on a downtrend over the past eight sessions and risk falling through the key US$50 level, according to the Business Spectator.

Paladin Energy Ltd (ASX:PDN) and EVOLUTION FPO (ASX:EVN) gave up the gains accrued in the earlier session, falling 6.3 per cent and 4.62 per cent respectively. Services provider Transfield Services Limited (ASX:TSE), the biggest loser on the S&P/ASX 200, was down 8.33 per cent to AU$1.045.

The big banks all closed higher, though. National Australia Bank Ltd. (ASX:NAB) gained 0.35 per cent to 31 AU$23, Westpac Banking Corp (ASX:WBC) was up 0.91 per cent to AU$31.03, and Australia and New Zealand Banking Group (ASX:ANZ) gained 0.14 per cent to AU$28.60.

Commonwealth Bank of Australia (ASX:CBA) was up 0.77 per cent to AU$76.39. The bank said it would hike its standard variable interest rates by 50 basis points on both owner-occupier and investor home loans, becoming the second major bank after Westpac to raise interest rates independently of the Reserve Bank. The bank attributed the move to costs arising from more rigorous capital requirements following from the Financial System Inquiry.

In consumer retail, Woolworths Limited (ASX:WOW) fell 0.59 per cent to AU$26.79. The Sydney Morning Herald said this morning that global buyout firms including KKR & Co. L.P. (NYSE:KKR) and TPG Capital were interested in acquiring the retailer’s Big W discount store chain. The newspaper’s sources said the Big W chain could be worth nearly AU$1.5 billion.

Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, gained 0.54 per cent to AU$40.92, though Myer Holdings Ltd (ASX:MYR) fell 2 per cent to AU$0.98 and Metcash Limited (ASX:MTS) plunged 3.66 per cent to AU$1.32.

Economic news, currency and market outlook

ACCC, the Australian competition watchdog, green-lighted the proposal by pay-TV operator Foxtel to acquire a 15 per cent stake in Ten Network Holdings Limited (ASX:TEN). "The ACCC considers that the proposed acquisitions, on their own, are unlikely to result in a substantial lessening of competition," ACCC chairman Rod Sims said, as quoted by the ABC.

According to National Australia Bank’s quarterly business survey, business confidence fell to its lowest since 2013 on the back of concerns regarding the country’s political leadership and the turmoil faced by commodities and emerging economies. However, the survey showed that business conditions, particularly in the non-mining parts of the economy, gather momentum in the September quarter, and that the future outlook appeared to be “notably better.”

On Wall Street Thursday, stocks ended with solid gains on the back of stronger than expected earnings reported by top companies such as McDonald's Corporation (NYSE:MCD), Alphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN). In fact, the S&P 500 closed at its highest level in over two months. The Dow Jones Industrial Average rose 320.55 points, or 1.87 percent, to 17,489.16, the S&P 500 gained 33.57 points, or 1.66 percent, to 2,052.51 and the Nasdaq Composite added 79.93 points, or 1.65 percent, to 4,920.05.

The Australian dollar traded slightly higher in response to ECB moves including keeping interest rates on hold and an indication that it would boost its stimulus program. At 7am (AEDT), the currency was trading at 72.13 US cents, up from 71.96 US cents on Thursday.

The Australian stock market is likely to open higher given that at 06:45 am (AEDT) this morning the December ASX SPI200 Index (AP) Future contract was up 82 points at 5,314.