mining stocks boost the asx on the first session of the new year 905092015
US dollar strength and beaten down commodities push the Aussie to new lows
Australian stocks closed the first session of the New Year with gains on the back of a strong performance from mining stocks. Both the S&P/ASX200 and the All Ordinaries indices were up 0.5 per cent and closed at 5,435.9 and 5,415 respectively. A rally in iron ore prices spurred investors to scoop up beaten down mining stocks, particularly the smaller ones, many of which ended the day with double-digit gains, on a day marked by thin trading.
The top three gainers on the S&P/ASX200 were iron ore stocks. Atlas Iron Ltd (ASX:AGO) closed nearly 40 per cent higher at AU$0.23, spurred by reports that a company director had ramped up his holding in the company. BC Iron Ltd (ASX:BCI) shot up 16.98 per cent to AU$0.62, while Mount Gibson Iron Ltd (ASX:MGX) gained 14.29 per cent to end the session at AU$0.28. In recent trades, iron ore managed to rise above the US$71 per tonne level after touching a five-and-half-year low of US$66.84 on December 23, and investors are hoping that prices of the steel-making raw material may finally stabilise after their record fall in 2014. The larger miners also ended higher. Fortescue Metals Group Ltd (ASX:FMG) was up 3.28 per cent to AU$2.83, Rio Tinto Ltd (ASX:RIO) gained 0.57 per cent to close at AU$58.33 while BHP Billiton Ltd (ASX:BHP) put on 0.58 per cent to AU$29.54.
According to the Financial Review, Rio Tinto may announce a sizeable buyback next month against a backdrop of Glencore’s ambitious takeover proposal and apparently stronger iron ore prices. Paul McTaggart, mining expert at Credit Suisse, said the company could announce a buyback of US$4 billion (AU$5 billion) that could phase over three years and boost underlying dividends by 15 per cent. “They’ve talked it up so much,” he said. “Iron ore looks like it’s stabilising and unless the price completely falls out of bed, I think they’ve made enough noise that they probably want to commit to something come February.”
A rapidly strengthening US dollar and overall weakness in commodity prices have pressured the Australian dollar down to nearly five year lows, according to The Australian Financial Review. At 08:26 today (AEDT) the Aussie was trading at 80.91 US cents, down from 81.37 US cents on Friday. "The key theme in the New Year has been US dollar strength and that has been represented in declines in most other currencies,” said Bank of New Zealand strategist Kymberly Martin. "We also continue to see quite significant falls in general commodity prices and that's not a particularly supportive backdrop for the Aussie dollar either," she added.
About seven traders at Australia and New Zealand Banking Group (ASX:ANZPB), including Etienne Alexious, head of balance sheet trading, remain under suspension in the midst of an ASIC investigation into likely manipulation of the bank bill swap rate market, according to The Australian Financial Review. ASIC chairman Greg Medcraft said the watchdog had deployed nearly a fifth of its enforcement resources to investigate 14 banks that set the daily bank bill swap rate during a period of potential misconduct from 2007 through 2013.
The corporate watchdog meanwhile refused to divulge information on correspondence relating to seven fund raising prospectuses issued during the period from 2009 through 2014 by companies that had been temporarily or permanently banned by the ASIC. The watchdog turned down a Freedom of Information request in this regard by The Australian, saying the release of the information would not be in the public interest.
Businessman Paul Little is constructing an AU$30 million world-class private jet air terminal at Melbourne airport to meet growing demand from global superstars, sports heroes and the rapidly growing ranks of Asian super-rich owning private jets, according to The Australian Financial Review. Meanwhile Skytrans, the Cairns based, family-owned regional airline ceased operations after 25 years, citing the loss of Queensland Government contracts and higher operating costs due to a weakening Australian dollar, according to ABC.
Australian stocks may open lower today according to The Business Spectator, given that the March share price index futures contract was down 42 points at 5,361 at 06:45 (AEDT) this morning.
Find up to date information on the ASX at City Index.
