the asx 200 has another flat day investors skittish around the 6000 level 1207672015

The Australian stock market traded water in Wednesday’s trading, just managing to score a meagre gain, as investors looked for triggers to provide direction to the market in a week marked by scant flow of economic data. The technical significance of the strong resistance offered by the 6,000 line on the S&P/ASX 200 has also sunk into traders’ psyches after the recent failures by the market to scale that level.

Yesterday’s market action clearly showed investors’ skittishness when the S&P/ASX 200 jumped sharply in the opening hour to a high of 5,988.70, seemingly shaping up to cross 6,000. But immediate selling ensued, and the downtrend carried through to around 2:30 pm, when the index touched a low of 5,961.50, well into negative territory. A small rally thereafter, likely triggered by bargain-hunting, helped the index scrape into positive territory just.

Indices and sectors

The benchmark S&P/ASX 200 on Wednesday gained 4.2 points, or 0.1 per cent, and closed at 5,973.3, while the broader All Ordinaries index was up 2.6 points, or 0.0 per cent, at 5,937.1.

The top gaining sectors were real estate investment trusts (+0.58 per cent), consumer discretionary (+0.46 per cent), financials (+0.39 per cent) and utilities (+0.19 per cent). The main losing sectors were information technology (-0.85 per cent), energy (-0.66 per cent), and healthcare (-0.52 per cent).

Stocks

The four major banks all ended in the black yesterday, and were mainly responsible for the meagre gains of the S&P/ASX 200. Commonwealth Bank of Australia (ASX:CBA) was up 0.81 per cent to AU$95.86, Australia and New Zealand Banking Group (ASX:ANZ) gained 0.81 per cent to AU$37.19, Westpac Banking Corp (ASX:WBC) was up 0.81 per cent to AU$39.89 and National Australia Bank Ltd. (ASX:NAB) gained 0.90 per cent to AU$39.30. Both ANZ and Westpac closed at record highs. According to The Sydney Morning Herald, which quoted UBS, the 32 per cent weightage of the banking sector in the ASX 300 is an international record and “the largest exposure to the banking sector of any developed market exchange in modern history.”

Amongst miners, BHP Billiton Limited (ASX:BHP) fell 0.35 per cent to AU$31.11, Rio Tinto Limited (ASX:RIO) was down 0.94 per cent to AU$56.83, and Mount Gibson Iron Limited (ASX:MGX) slumped 2.27 per cent to AU$0.22. However other mining stocks ended higher. Fortescue Metals Group Limited (ASX:FMG) gained 1.49 per cent to AU$2.04, Atlas Iron Limited (ASX:AGO) shot up 3.57 per cent to AU$0.15 and BC Iron Limited (ASX:BCI) rose 2.44 per cent to AU$0.42. Australia’s Competition and Consumer Commission (ACCC) has taken a dim view of Fortescue Metals Group Limited chairman Andrew Forrest’s remarks at a Shanghai dinner calling for a cutback in iron ore production by the larger miners with a view to boost prices, saying Forrest’s comments may be illegal. Iron ore prices gained 2.6 per cent overnight, according to the Australian.

Energy stocks were mostly down. Woodside Petroleum Limited (ASX:WPL) fell 0.88 per cent to AU$35.10, Santos Ltd (ASX:STO) was down 0.68 per cent to AU$7.34 and Oil Search Limited (ASX:OSH) fell 1.04 per cent to AU$7.60; however, Origin Energy Ltd (ASX:ORG) was up 0.26 per cent to AU$11.77.

Telstra Corporation Ltd (ASX:TLS) was down 0.16 per cent to AU$6.37. iiNet Limited (ASX:IIN) shot up 1.39 per cent to AU$8.78 and TPG Telecom Ltd (ASX:TPM) gained 0.22 per cent to AU$9.16. According to a report in Business Spectator, TPG Telecom has reached out to iiNet founder Michael Malone to address his concerns, particularly the lack of communication, regarding TPG’s proposed AU$1.4 billion takeover of iiNet. Mr Malone has been one of the most prominent critics of the deal, though his holding in iiNet is only 2.5 per cent. “My family and I do not believe this deal as it is structured is in the best interests of shareholders, staff or customers,” he said Monday. “It’s not the time to sell, it’s a time for change.”

The big retailers, Woolworths Limited (ASX:WOW) and Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, both ended about 0.31 per cent lower at AU$28.96 and AU$84.07 respectively. However, Myer Holdings Ltd (ASX:MYR) shot up sharply by 4.43 per cent to AU$1.415 as investors bought in to the stock thinking it had been unduly punished in recent days.

Economic news, currency and insight

The RBA issued its latest Financial Stability Review and expressed its concerns on an overheated property market. The Central bank warned that some banks may soon need to make a “behavioral adjustment” to rein in the easy availability of mortgage finance that was causing boom in house prices and increasing the risk of instability in the economy, according to The Australian. The bank said “robust investor activity” could fuel excessive construction activity leading to a future overhang of housing supply.

On the positive side, the RBA said Australian businesses were improving their financial status by controlling their spending and being careful about debt.

Overnight on Wall Street, vicious selling took a heavy toll on the mainline indices in a third consecutive negative session, as semiconductor and biotech shares took the lead by giving up over 4 per cent, according to Reuters. The Dow Jones Industrial Average ended off 292.6 points, or 1.62 percent, to 17,718.54, the S&P 500 lost 30.45 points, or 1.46 percent, to 2,061.05, and the Nasdaq Composite dropped 118.21 points, or 2.37 percent, to 4,876.52.

The Australian dollar traded soft, despite weaker economic data out of the US. At 07:00 (AEDT), the local currency was trading at 78.39 US cents, down from 78.78 US cents yesterday, according to The Australian.

The Australian stock market is likely to open lower today given that the June ASX SPI200 Index (AP) Futures was down by 43 points at 5,927.0 at 06:59 this morning (AEDT).