australian stocks bounce back as investors scoop up bank shares 1144232015

A strong show by the big Australian banks and positive employment data helped neutralise continued sluggishness in mining shares, and led the Australian stock exchange to a welcome recovery in Thursday’s trading, after three days of losses.

The benchmark S&P/ASX 200 was flying higher right out of the gate yesterday and the rally achieved its best level of 5,855.30 shortly after 14:00. The market traded sideways after that, but gave up none of those gains.

Indices and sectors

The benchmark S&P/ASX 200 on Monday rose 57 points, or 1.0 per cent, and closed at 5,850.2, while the broader All Ordinaries index was up 52.7 points, or 0.9 per cent, at 5,816.0.

The significant gaining sectors were financials (+1.40 per cent), industrials (+1.37 per cent), information technology (+1.31 per cent) and telecommunication services (+1.19 per cent). Utilities (-0.35 per cent) and materials (-0.04 per cent) were the only two losing sectors.

Stocks

The major banks were the stars of the day, all rising by over 1 per cent. Commonwealth Bank of Australia (ASX:CBA) rose 1.44 per cent to AU$91.82, Westpac Banking Corp (ASX:WBC) was up 1.57 per cent to AU$38.09, Australia and New Zealand Banking Group (ASX:ANZ) jumped 1.19 per cent to AU$35.64 and National Australia Bank Ltd. (ASX:NAB) was up 1.17 per cent to AU$38.00. Macquarie Group Ltd (ASX:MQG) was sharply higher by 3.40 per cent to AU$76.60.

Mining shares continued to disappoint, and BHP Billiton Limited (ASX:BHP) was down 0.43 per cent to AU$30.20, Rio Tinto Limited (ASX:RIO) fell 0.64 per cent to AU$57.50, Fortescue Metals Group Limited (ASX:FMG) slid 1.79 per cent to AU$1.91, while Atlas Iron Limited (ASX:AGO) was unchanged at AU$0.150. Mount Gibson Iron Limited (ASX:MGX) fell 2.27 per cent to AU$0.215, but BC Iron Limited (ASX:BCI) bucked the trend, gaining 1.30 per cent to AU$0.390.

Two gold miners topped the S&P/ASX 200 losers’ list. PanAust Limited (ASX:PNA) fell 4.6 per cent to AU$1.14, and Beadell Resources Ltd (ASX:BDR) was off by 4.08 per cent to AU$0.235.

Energy stocks ended higher except Santos Ltd (ASX:STO), which fell 0.4 per cent to AU$7.30. Woodside Petroleum Limited (ASX:WPL) gained 1.10 per cent to AU$34.79, Oil Search Limited (ASX:OSH) jumped 1.92 per cent to AU$7.95, and Origin Energy Ltd (ASX:ORG) was up 0.52 per cent to AU$11.62. Worleyparsons Limited (ASX:WOR), one of the biggest gainers on the S&P/ASX 200, shot up 6.18 per cent to AU$9.79.

Amongst retailers, Woolworths Limited (ASX:WOW) gained 0.34 per cent to AU$29.45 and Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was up 0.25 per cent to AU$43.66. However, Myer Holdings Ltd (ASX:MYR) slumped 1.85 per cent to AU$1.60.

Though Qantas Airways Limited (ASX:QAN) moved up 2.72 per cent to AU$3.02, Virgin Australia Holdings Ltd (ASX:VAH) fell 2.02 per cent to AU$0.485.

Telstra Corporation Ltd (ASX:TLS) was up 1.13 per cent to AU$6.29.

Economic news, currency and insight

Data on employment for February released by the Australian Bureau of Statistics showed the unemployment rate dropped to 6.3 per cent, down from the 12-year high of 6.4 per cent touched a month earlier, and beating the consensus expectation of an unchanged 6.4 per cent reading, according to the ABC. The Australian economy added 15,600 new jobs in February, comprising 10,300 full-time and 5,300 part-time jobs.

However, economists were not really gung-ho about the data. Capital Economics' senior Asia economist Daniel Martin said unemployment had still not peaked in Australia, according to The Sydney Morning Herald. "The bigger picture is still that Australia's economy is struggling to create jobs, and we still expect the unemployment rate to rise to 7 per cent by the end of the year," he said.

Most analysts expecting the RBA to further cut interest rates during this year remained unmoved by the jobs figures. "Unemployment remains high and, although the rate decreased marginally, the participation rate also dropped, perhaps reflecting discouraged workers," said Aberdeen Asset Management senior investment manager Jasmin Argyrou. "There is considerable slack in the economy, bringing with it disinflationary forces that will likely lead to additional monetary easing."

The Australian dollar was able to ride the fall in Australia’s unemployment rate to climb back above 76 US cents yesterday. It received a fresh boost due to weakness in the US dollar following disappointing US retail sales data that showed a fall of 0.6 per cent in February, the third consecutive month of decline. “The Australian dollar’s had a bit of a move higher overnight. Broadly, it’s been a beneficiary of a weaker US dollar,” Bank of New Zealand strategist Kymberly Martin said from Wellington, and quoted by The Australian. “That was really cemented by US retail sales number. It was quite disappointing, relative to expectation, and as a result of that, it drove the US dollar lower, really across the board.” The Aussie was trading at 77.00 US cents at 07:00 this morning (AEDT), up from 76.20 cents yesterday.

The Australian stock market is likely to open higher today given that the March ASX SPI200 Index (AP) Futures was up 13 points at 5,859.0 at 06:59 this morning (AEDT).