australian stocks correct as investors turn cautious on greece and commodities 1568042015

Australian stocks on Friday corrected after the solid rally in the previous session, shrugging off overnight gains on Wall Street, and weighed down again by rocky negotiations between Greece and its European creditors, as well as a fall in crude oil and copper prices.

Market action was notable for the high volatility during the session as the bull and bear camps struggled to gain the upper hand. In the end, the main indices closed with token losses.

Indices and sectors

The benchmark S&P/ASX 200 on Friday fell 11.4 points, or 0.2 per cent, and closed at 5,545.3, while the broader All Ordinaries index was down 10.5 points, or 0.2 per cent, at 5,552.1.

The sectors that closed with gains were utilities (+0.86 per cent), healthcare (+0.60 per cent), information technology (0.39 per cent), and real estate investment trusts (+0.33 per cent). The losing sectors included materials (-0.56 per cent), consumer staples (-0.45 per cent), financials (-0.24 per cent) and consumer discretionary (-0.22 per cent).

Stocks

Mining stocks ended mostly in the negative. BHP Billiton Limited (ASX:BHP) fell the most by 1.17 per cent to AU$27.90, Rio Tinto Limited (ASX:RIO) was down 0.59 per cent to AU$57.14 and Fortescue Metals Group Limited (ASX:FMG) slipped 0.81 per cent to AU$2.46. Uranium mining company, Energy Resources of Australia Limited (ASX:ERA), plunged 48.26 per cent to AU$0.670 after the company and majority shareholder Rio Tinto decided not to proceed further with studies to determine the feasibility of developing the Ranger 3 Deeps uranium expansion project in the Northern Territory’s Kakadu National Park. Iron ore prices, however, hit a fresh four-month high in an eight-day rally.

Energy stocks, too, ended lower, though Origin Energy Ltd (ASX:ORG) was up 1.33 per cent to AU$12.94 and Santos Ltd (ASX:STO) gained 0.85 per cent to AU$8.34. However, Woodside Petroleum Limited (ASX:WPL) fell 0.33 per cent to AU$36.73 and Oil Search Limited (ASX:OSH) dipped 0.39 per cent to AU$7.73.

With the exception of Commonwealth Bank of Australia (ASX:CBA), which gained a mere 0.01 per cent to AU$81.42, the other major banks all ended with losses. Westpac Banking Corp (ASX:WBC) fell 0.94 per cent to AU$31.67, Australia and New Zealand Banking Group (ASX:ANZ) was down 0.31 per cent to AU$31.71 and National Australia Bank Ltd. (ASX:NAB) declined 0.77 per cent to AU$32.26.

Retailers ended mostly in the red. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was down 0.27 per cent to AU$41.31, Woolworths Limited (ASX:WOW) fell 0.55 per cent to AU$26.93, Caltex Australia Limited (ASX:CTX) gave up 0.65 per cent to AU$32.00 and Myer Holdings Ltd (ASX:MYR) slumped 5.45 per cent to AU$1.30.

Economic news, currency and market outlook

Talks between Greece and its European creditors collapsed during the weekend as the two sides failed to converge on an agreement, increasing the chances of a Greek default. European Commission spokeswoman Annika Breidthardt said Sunday that new proposals presented by Greece were incomplete and were €2 billion short in terms of spending cuts and economic reforms.

Capital city rents in Australia rose a mere 0.1 per cent in May and only 1.5 per cent year-on-year according to CoreLogic RP Data's May rental index. That’s the slowest annual growth according to records, and is a result of the huge growth in property investment, according to ABC.

Data on business lending out Friday from the Australian Bureau of Statistics showed that new commercial finance commitments rose four per cent in April, compared with the previous month (in seasonally adjusted terms) to AU$46.5 billion – the highest amount since July last year, according to Banking Day.

On Wall Street Friday, stocks fell amidst the stalemate in the bailout negotiations between Greece and its creditors. The Dow Jones Industrial Average dropped 140 points, or 0.8 per cent, to close at 17,899. The S&P 500 index fell 15 points, or 0.7 per cent, to 2,094, and the Nasdaq Composite Index declined 31 points, or 0.6 per cent, to 5,051.

The Australian dollar is currently trading higher even as cracks appear in the negotiations between Greece and its international creditors, according to Business Spectator. At 07:00 this morning (AEST), the Aussie was trading at 77.53 US cents, up from 77.27 US cents on Friday.

The Australian stock market is likely to open flat today given that the June ASX SPI200 Index (AP) Futures was down 6 points at 5,528.