australian stocks close slightly higher after volatile session 1691162015

An overnight positive close on Wall Street, a rebound in the Chinese stock markets and rising hopes of a Greek deal with the euro zone helped Australian stocks close with a small gain on the last day of the week. Another bullish factor was a sharp rise in the price of iron ore that boosted sentiments in favour of the mining sector. Trading on Friday was marked by high volatility, with the indices finally closing well below their highs.

Indices and sectors

The benchmark S&P/ASX 200 rose 21 points, or 0.4 per cent, and closed at 5,492, while the broader All Ordinaries index was up 21.8 points, or 0.4 per cent, at 5,478.1.

The main gaining sectors were materials (+1.49 per cent), energy (+0.83 per cent), utilities (+0.80 per cent) and information technology (+0.47 per cent). The losing sectors were healthcare (-0.22 per cent), real estate investment trusts (-0.21 per cent) and industrials (-0.07 per cent).

Stocks

The materials sector was the top gainer for the second day running. In mining, BHP Billiton Limited (ASX:BHP) shot up nearly 3 per cent to AU$26.65, Rio Tinto Limited (ASX:RIO) was up 2.32 per cent to AU$52.07 and Fortescue Metals Group Limited (ASX:FMG) rose 1.68 per cent to AU$1.82.

In energy, Woodside Petroleum Limited (ASX:WPL) gained 0.15 per cent to AU$33.57, Origin Energy Ltd (ASX:ORG) was up 0.80 per cent to AU$11.36, Oil Search Limited (ASX:OSH) gained 2.79 per cent to AU$7.00 and Santos Ltd (ASX:STO) was up 1.87 per cent to AU$7.62.

With the exception of National Australia Bank Ltd. (ASX:NAB), which closed down 0.18 per cent at AU$33.07, the other three major banks all ended in positive territory. Commonwealth Bank of Australia (ASX:CBA) was up 0.22 per cent to AU$85.79, Australia and New Zealand Banking Group (ASX:ANZ) gained 0.12 per cent to AU$32.25, and Westpac Banking Corp (ASX:WBC) shot up 0.67 per cent to AU$33.10.

The retail sector closed mixed. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, lost 0.08 per cent to AU$39.88, Woolworths Limited (ASX:WOW) rose 0.34 per cent to AU$26.92, Caltex Australia Limited (ASX:CTX) fell 0.40 per cent to AU$32.76 and Myer Holdings Ltd (ASX:MYR) lost 0.40 per cent to AU$1.25.

Economic news, currency and market outlook

Following extensive talks over the weekend, the Eurozone leaders have presented Greece with an impossible choice. Either Greece must agree to bailout terms that are much stiffer than the previous years, and accept these terms by passing them into law by Wednesday, or else it must face a temporary “time-out” from membership of the currency block if it refuses those terms, according to The Guardian. The development is likely to result in political upheaval in Greece, even new elections. On the other hand, it was accompanied by visible signs of a deep discord between the Eurozone countries on how to handle the Greek problem.

Stocks closed higher on Wall Street as investors thought there could be a weekend deal between Greece and its creditors, though some gains were given up after Fed Chair Yellen said interest rates were on course to rise sometime this year. However, she qualified the statement by citing weakness in the US labour market as a cause for concern. The Dow Jones Industrial Average rose 211.79 points, or 1.21 percent, to 17,760.41, the S&P 500 gained 25.31 points, or 1.23 percent, to 2,076.62 and the Nasdaq Composite added 75.30 points, or 1.53 percent, to 4,997.70.

The Australian dollar is trading soft as the markets wait for further developments from the ongoing deliberations between Greece and its creditors. At 07:00 this morning (AEST) the local currency was trading at 74.16 US cents, down from 74.69 US cents on Friday.

The Australian stock market is likely to open higher today given that at 06:45 am (AEST) this morning the September ASX SPI200 Index (AP) Futures was up 35 points at 5,472.