the asx rises 1 per cent in broad based rally 1479272015
A weak local currency and M&A news nudge stocks higher
Australian stocks represented by the S&P/ASX 200 gained one per cent yesterday with weakness in the Australian dollar as well as corporate deal-making news acting as tailwinds.
The financial sector received fresh support from investors, and according to analysts, one reason may be the continuing attractive yields available even on the larger banks. The materials and energy sectors were boosted by better underlying product prices such as of iron ore and crude oil.
In market action, the S&P/ASX 200 bolted higher right out of the gate yesterday, and the rally reached the day’s high of 5,733.30 by approximately 2 PM. A correction in the last two hours of trade erased some of those gains, however.
Indices and sectors
The benchmark S&P/ASX 200 on Monday rose 56.8 points, or 1.0 per cent, and closed at 5,721.5, while the broader All Ordinaries index was up 51.7 points, or 0.9 per cent, at 5,719.9.
The top gaining sectors were utilities (+1.63 per cent), industrials (+1.38 per cent), healthcare (+1.20 per cent), energy (+1.17 per cent), financials (+1.06 per cent) and materials (+1.01 per cent). The only losing sector was real estate investment trusts (-0.17 per cent).
Stocks
In mining stocks, which received a boost from rising iron ore prices, BHP Billiton Limited (ASX:BHP) was up 0.79 per cent to AU$29.48, Rio Tinto Limited (ASX:RIO) shot up 1.55 per cent to AU$57.63, and Fortescue Metals Group Limited (ASX:FMG) gained 2.84 per cent to AU$2.17. Mount Gibson Iron Limited (ASX:MGX) was flat at AU$0.235 and BC Iron Limited (ASX:BCI) gained 2.47 per cent to AU$0.415. A report by ABC said that Sirius Resources N.L. (ASX:SIR) is to be acquired by Independence Group NL (ASX:IGO) for AU$4.38 per share in a transaction worth AU$1.8 billion. Sirius owns the high-quality Nova nickel and copper deposit in the Fraser Range in WA's Goldfields and its stock shot up over 20 per cent to AU$3.90 following news of the Independence bid, making it the top gainer on the S&P/ASX 200 yesterday.
Energy stocks were well-supported by investors following steady global crude prices. Woodside Petroleum Limited (ASX:WPL) shot up 1.68 per cent to AU$36.30, Origin Energy Ltd (ASX:ORG) was higher by 0.08 per cent at AU$12.81, Oil Search Limited (ASX:OSH) gained 0.66 per cent to AU$7.62 and Santos Ltd (ASX:STO) was up 2.22 per cent to AU$8.27.
The large banks rebounded yesterday. Commonwealth Bank of Australia (ASX:CBA) was up 1.07 per cent to AU$84.00, National Australia Bank Ltd. (ASX:NAB) rose 0.90 per cent to AU$33.53, Australia and New Zealand Banking Group (ASX:ANZ) shot up 0.84 per cent to AU$32.32 and Westpac Banking Corp (ASX:WBC) was up 1.23 per cent to AU$32.96.
Amongst retailers, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, closed 1.32 per cent up at AU$43.90, Woolworths Limited (ASX:WOW) rose 1.06 per cent to AU$28.48, Caltex Australia Limited (ASX:CTX) went up 1.33 per cent at AU$34.20 and Myer Holdings Ltd (ASX:MYR) gained 0.34 per cent to AU$1.48.
Airline Virgin Australia Holdings Ltd (ASX:VAH) declined 2.00 per cent to AU$0.490 while rival Qantas Airways Limited (ASX:QAN) gained 1.16 per cent to AU$3.49. According to ABC, the federal government is reportedly considering a proposal to allow overseas airlines to carry domestic passengers to destinations within the country. Industry experts and stakeholders view this development as a major threat to local airlines such as Qantas and Virgin.
Economic news, currency and insight
The Westpac-Melbourne Institute small business confidence index declined 12.7 per cent to 108.2 points during the month of April from February, its worst reading in a year. “This Index was taken before the Federal Budget announcement, which included a number of tax breaks and allowances for small business, and should result in improved conditions and increased sentiment among Australian small businesses over the next quarter,” said Westpac’s general manager of small business, Julie Rynski, as quoted by news.com.
According to a report in the Financial Review, Fortescue Metals Group Limited (ASX:FMG) has been holding discussions with Chinese industrial giants such as steel producer Baosteel, and China's largest conglomerate, CITIC, on a proposal to recapitalize the iron ore producer’s balance sheet. The report quoted sources who said that Chinese linked companies have applied to the country’s Foreign Investment Review Board for permission to invest in Fortescue.
Meanwhile, a report in The Sydney Morning Herald said OZ Minerals Limited (ASX:OZL) was carrying out due diligence on as many as four potential acquisitions and would proceed further if their cost of acquisition offered value.
The Australian dollar was trading weaker as most key global markets were closed for holidays, according to Business Spectator. At 07:00 this morning (AEST), the Aussie was trading at 78.24 US cents, down from 78.31 US cents on Monday.
The Australian stock market is likely to open lower today given that at 6.55 am (AEST) on Tuesday the June ASX SPI200 Index (AP) Futures were down 4 points at 5,722.
