australian stocks end a tad higher with banks leading the show 1729062015

Australian stocks closed higher for the fifth consecutive trading session on Monday. The S&P/ASX 200 index vacillated between positive and negative territories until shortly before 2 PM, when it decided to move higher in a rally that ended at the day’s high of 5,688.30. The index ended in the green despite a sideways correction in the last hour of trade.

The highlights of the day’s trading were the sharp losses suffered by gold mining stocks following a crash in the global gold prices, and the recovery in the banking counters despite new restrictions on the major banks by APRA regarding the average risk weight ratio on residential mortgages.

Indices and sectors

The benchmark S&P/ASX 200 rose 16.8 points, or 0.3 per cent, and closed at 5,686.9, while the broader All Ordinaries index was up 16.5 points, or 0.3 per cent, at 5,669.

The top gaining sectors were information technology (+2.26 per cent), healthcare (+0.80 per cent), and financials (+0.52 per cent). The losers included energy (-0.88 per cent), materials (-0.35 per cent) and utilities (-0.16 per cent).

Stocks

Energy utility company DUET Group (ASX:DUE) is in a trading halt following its announcement of a AU$1.67 billion equity raising to acquire 100 per cent of the shares in Energy Developments Limited (ASX:ENE) for AU$8.07 per share in cash. Duet chairman Mr Doug Halley said, “Energy Developments is a strong strategic fit with Duet. The proposed acquisition will enhance the diversity of our operating cash flows and provide an attractive source of growth for the Group.”

Gold mining companies Evolution Mining Ltd (ASX:CAH), Newcrest Mining Limited (ASX:NCM) and Northern Star Resources Ltd (ASX:NST) lost 14.54 per cent, 10.08 per cent and 9.61 per cent respectively, and were the top three losers on the S&P/ASX 200, aside from DUET Group. Gold miners were sold off by investors following the sharp cut in prices of the yellow metal on rumours of heavy selling by Chinese gold holders, and the strength in the US Dollar.

Other miners closed mixed. BHP Billiton Limited (ASX:BHP) fell 0.41 per cent to AU$26.99, Rio Tinto Limited (ASX:RIO) shot up 1.62 per cent to AU$53.87 and Fortescue Metals Group Limited (ASX:FMG) jumped 1.75 per cent to AU$1.75.

Energy stocks closed in the red, following continuing softness in crude prices. Woodside Petroleum Limited (ASX:WPL) was down 0.60 per cent to AU$34.78, Origin Energy Ltd (ASX:ORG) fell 1.06 per cent to AU$11.25, Oil Search Limited (ASX:OSH) was down 1.28 per cent to AU$6.95 and Santos Ltd (ASX:STO) slumped 1.57 per cent to AU$7.54.

Banks, however, all ended in positive territory. Commonwealth Bank of Australia (ASX:CBA) was up 0.43 per cent to AU$88.36, Westpac Banking Corp (ASX:WBC) gained just 0.09 per cent to AU$34.60, Australia and New Zealand Banking Group (ASX:ANZ) shot up 1.26 per cent to AU$32.85 and National Australia Bank Ltd. (ASX:NAB) was up 0.29 per cent to AU$34.44. The Australian Prudential Regulation Authority (APRA) sharply increased the average mortgage risk weight on residential mortgages from the current average of around 16 per cent to 25 per cent, with the change being applicable only to the above four big banks and Macquarie Bank, coming into effect from July 1, 2016.

Amongst retailers, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, gained 0.41 per cent to AU$41.92, Woolworths Limited (ASX:WOW) was up 0.28 per cent to AU$28.58 and Caltex Australia Limited (ASX:CTX) rose 0.20 per cent to AU$34.61. However, Metcash Limited (ASX:MTS) slumped 2.58 per cent to AU$1.13, and Myer Holdings Ltd (ASX:MYR) slipped 1.95 per cent to AU$1.26.

Economic news, currency and market outlook

Greece has repaid €4.2 billion (AU$6.17 billion) to the ECB and the €2 billion it owned to the IMF after it received €7.16 billion in short-term financing from the European Financial Stability Mechanism, said Dow Jones Newswires quoting senior Greek officials. Greece is therefore no longer in default to the IMF according to the Fund’s spokesman.

On Wall Street Monday, the major stock indexes closed more or less unchanged as better-than-expected corporate earnings encouraged investors, but continuing pressures in the commodity space countered those gains, as reported Reuters. The Dow Jones Industrial Average rose 13.36 points, or 0.07 percent, to 18,099.81, the S&P 500 gained 1.59 points, or 0.07 percent, to 2,128.23 and the Nasdaq Composite added 8.72 points, or 0.17 percent, to 5,218.86.

The Australian dollar is continuing to rule weak against the US greenback following the growing likelihood of an interest rate hike by the US Fed sometime this year, according to the Business Spectator. At 06:30 this morning (AEST) the local currency was trading at 73.72 US cents, down from 73.90 US cents on Monday.

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 9 points at 5,651.