asx rides the bullish tide in global markets to end 2 5 per cent higher 904342014

The ASX signed off last week with a flourish, surging nearly 2.5 per cent in the wake of a global rally in stocks unleashed by a dovish US Fed. This was the Australian share market’s biggest single-session gain of the year, according to the ABC. The S&P/ASX200 added 127.8 points or 2.5 per cent to close at 5,338.6, while the broader All Ordinaries gained 123 points, or 2.4 per cent, ending at 5,312.7. The sectors that gained the most were industrials up 3.3 per cent, materials higher by 3.10 per cent and financials, which rose 2.5 per cent, while all sectors were up over 1 per cent.

“We’ve seen the market switch 180 degrees this week,” Macquarie Private Wealth division director Martin Lakos said to The Australian. “From concern about oil price volatility and what the Federal Reserve would say about interest rates, the market is starting to accept that US interest rates will stay low and the low oil price is going to reflate global economic growth.”

Australia’s first IPO from a medical marijuana company, PhytoTech, has been postponed to next year. The much-anticipated IPO, expecting to raise A$5 million from 25 million shares at A$0.20 each, and scheduled to list today, was put on hold because the ASX has sought assurances about the legality of its products, according to The Sydney Morning Herald.

Telstra Corporation Ltd (ASX:TLS) inked a deal worth A$390 million to prepare plans and designs to support the roll-out of the National Broadband Network. “We’re pleased to have won this work in a competitive market and we look forward to working with NBN Co to help it prepare for the construction of the next phase of the NBN,” said Kate McKenzie, Telstra chief operations officer, as reported by the Business Spectator.

Crude oil prices rebounded off five-year lows on Friday on short-covering and futures’ end-of-account consideration. The front month contracts for Brent futures rose 3.4 per cent to close at US$61.38, while US crude ended 4.5 per cent higher at US$56.52, according to Reuters. However, speaking yesterday at a conference in Abu Dhabi, Saudi Oil Minister Ali al-Naimi reiterated Saudi Arabia’s determination not to cut oil output, indicating that the world’s biggest oil exporter would likely prefer to ride out oil’s record plunge. "If they want to cut production they are welcome: we are not going to cut, certainly Saudi Arabia is not going to cut," he said, referring to non-OPEC oil producing countries.

Last week, the Australian dollar plunged below the 82 cents mark for the first time in over four years, setting off a renewed spate of selling in the currency. However, there may be more weakness to follow, according to Credit Suisse strategist Damien Boey, quoted in The Sydney Morning Herald. "It was hanging in there as a resistance point for a while, but all the drivers of the currency have just fallen and fallen," he said. "Mid US70¢ is a reasonable projection for the dollar. For Credit Suisse that target is set for around mid to late next year, but it looks like this could be more of a short-term target."

In an article in The Sydney Morning Herald, columnist Michael West said a merger between Rio Tinto Limited (ASX:RIO) and Glencore PLC (LON:GLEN) would be damaging for Australia and should be turned down by the Foreign Investment Review Board. “Billions of dollars in tax payments are on the line, not to mention job losses and the spectre of this country ceding control over a large chunk of its natural resources to a secretive group of commodity traders ultimately run out of Switzerland,” he said.

The hitherto slightly disappointing trend in pre-Christmas retail sales is likely to have turned on Friday when shoppers turned out in big numbers, said Australian Retailers Association executive director Russell Zimmerman in The Age. Shopping this Christmas could rise 4.3 percent compared to last year and touch A$45 billion, forecasts the Association.

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