australian stocks close at a fresh seven year high 1070552015

Australian shares traded weak in the opening hour of trade Wednesday, with the benchmark S&P/ASX 200 falling to a low of 5,914.50, but recovered their stride thereafter and moved strongly upwards to hit the day’s high of 5,955.50 by around 15:00. A correction in the last hour of trade took some shine off those gains, however, but the S&P/ASX 200 nevertheless ended in the black for the third day running. The index also closed at its best level since May 2008.

Investors apparently were cheered by companies’ earnings reports and bid up stocks, despite blips such as economic data showing poor annual wage growth and slippage in construction work.

The market now appears to have set its sights on the 6,000 mark.

“The market has momentum behind it, so it may have a bit more in it; but, it's not an earnings-led market, it is a purely valuation driven market," said Equity Trustees head of asset management Paul Kasian, as quoted by The Sydney Morning Herald. “It's the only game in town for gaining any income on your capital – there's nothing in reporting season that says 'earnings growth is better than we thought, let's start buying more shares based on that'," he added.

Indices and sectors

The benchmark S&P/ASX 200 gained 17.9 points, or 0.3 per cent, and closed at 5,944.9, while the broader All Ordinaries index was up 18.6 points, or 0.3 per cent, to 5,908.6.

The top gaining sectors were materials (+1.23 per cent), utilities (+1.09 per cent), real estate investment trusts (+1.03 per cent) and consumer discretionary (+0.73 per cent). The significant losers were energy (-2.02 per cent) and telecommunications (-1.60 per cent).

Stocks

The four major banks closed mixed. Commonwealth Bank of Australia (ASX:CBA) was down 0.19 per cent to AU$90.87, and Westpac Banking Corp (ASX:WBC) fell 0.24 per cent to AU$37.80. Australia and New Zealand Banking Group (ASX:ANZ) gained 0.06 per cent to AU$35.31 and National Australia Bank Ltd (ASX:NAB) was up 0.5 per cent to AU$37.78.

Macquarie Group Ltd (ASX:MQG) outshone with a gain of 1.06 per cent to AU$72.23.

The miners had a good trading day and closed mostly in the black. BHP Billiton Ltd (ASX:BHP) jumped 1.33 per cent to AU$33.50, Rio Tinto Ltd (ASX:RIO) was higher by 0.70 per cent to AU$63.58, and Fortescue Metals Group Ltd (ASX:FMG) gained 0.81 per cent to AU$2.48.

However, Atlas Iron Ltd (ASX:AGO) was flat at AU$0.200 while Mount Gibson Iron Ltd (ASX:MGX) surged over 6 per cent to close at AU$0.25, and BC Iron Ltd (ASX:BCI) fell 1.01 per cent to AU$0.490.

Energy stocks ended mostly down and were the worst performing sector of the day. Woodside Petroleum Ltd (ASX:WPL) shed 4.22 per cent to close at AU$34.91, Oil Search Ltd (ASX:OSH) was down 1.09 per cent to AU$8.20, and Santos Ltd (ASX:STO) was down 1 per cent to AU$7.89. However, Origin Energy Ltd (ASX:ORG) bucked the trend and rose 2.27 per cent to AU$12.15. On the other hand, Worleyparsons Ltd (ASX:WOR) was the worst performer in the sector as well as the S&P/ASX 200, crashing 12.20 per cent to AU$9.86. Notably, Woodside was the fifth largest loser on the S&P/ASX 200 yesterday.

Insurer QBE Insurance Group Ltd (ASX:QBE) was up again putting on 4.82 per cent to close at AU$13.05. Seven Group Holdings Ltd (ASX:SVW) was one of the top gainers on the S&P/ASX 200, rising 10.84 per cent to AU$6.85 after the company announced more job losses and a buyback of 17.7 million shares commencing March 12.

Shares in appliances maker Breville Group Ltd (ASX:BRG) rebounded 10.46 per cent to AU$7.71, and figured among the top five gainers on the S&P/ASX 200.

Economic news, currency and insight

Data from the Australian Bureau of Statistics released Wednesday showed that the wage price index for the last quarter in 2014 grew only 0.6 per cent – the same percentage as in the previous two quarters – taking the annual rate to just 2.5 per cent, the lowest seen in 17 years, according to The Sydney Morning Herald.

The amount of construction work accomplished in Australia fell 0.2 per cent during the December quarter but was nevertheless ahead of economists’ expectations of a fall of 1.2 per cent, though it was down 4.8 per cent for the whole of 2014, according to AAP. The reading was, of course, a definite improvement on the September quarter print of a fall of 2.8 per cent.

The Australian Securities and Investments Commission, Australia’s corporate regulator, has used formal legal authority to gather more information from NAB in the scandal relating to its payments to certain customers for rendering inappropriate advice, said The Sydney Morning Herald. In a weekend expose, Fairfax Media revealed that NAB had quietly paid AU$10 million to AU$15 million in compensation during five years to 750 such customers. "ASIC is already expanding its work in response to the weekend's media coverage," ASIC chairman Greg Medcraft said at a Senate estimates hearing. "We have acted as soon as possible to ensure all allegations and issues raised are investigated."

The local stock market is likely to open down considering the March ASX SPI200 Index (AP) Futures was trading lower by 19 points to 5,896.0 at 07:59 this morning (AEDT).

The Australian dollar jumped higher Wednesday on bullish Chinese factory data and indications from the US fed that interest rates would likely stay on hold for longer, according to The Sydney Morning Herald. At 07:00 this morning (AEDT), the local unit was trading at 78.92 US cents, up from 78.88 cents on Tuesday.