australian stocks end friday on a soft note weighed down by miners and banks 1158752015

M&A news boosts iiNet Limited and TPG Telecom Ltd

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By :  ,  Financial Analyst

Australian stocks were dragged lower Friday chiefly by mining stocks heading lower due to bearish commodity prices, and nervous disinvestment in financial stocks, particularly banks. As a result, the ASX finished in the red for the second week on the trot.

Indices and sectors

The benchmark S&P/ASX 200 on Monday fell 35.7 points, or 0.6 per cent, and closed at 5,814.5, while the broader All Ordinaries index was down 28 points, or 0.5 per cent, at 5,788.0.

All sectors ended in the red on Friday. The significant losing sectors were information technology (-1.51 per cent), materials (-0.79 per cent), financials (-0.70 per cent) and utilities (-0.61 per cent).


The major banks all lost upwards of half percent. Commonwealth Bank of Australia (ASX:CBA) was down 0.54 per cent to AU$91.32, Westpac Banking Corp (ASX:WBC) fell 0.76 per cent to AU$37.80, Australia and New Zealand Banking Group (ASX:ANZ) dipped 0.56 per cent to AU$35.44, and National Australia Bank Ltd. (ASX:NAB) fell 0.68 per cent to AU$37.74. Losses in Macquarie Group Ltd (ASX:MQG) were sharply higher by 1.58 per cent to AU$75.39.

Mining shares ended mixed. BHP Billiton Limited (ASX:BHP) fell 1.46 per cent to AU$29.76, Rio Tinto Limited (ASX:RIO) fell 0.35 per cent to AU$57.30, but Fortescue Metals Group Limited (ASX:FMG) gained over 4 per cent to AU$2.00. Though Atlas Iron Limited (ASX:AGO) was unchanged at AU$0.150, Mount Gibson Iron Limited (ASX:MGX) jumped 2.33 per cent to AU$0.220.

Gold miner Evolution Mining Ltd (ASX:EVN) fell 4.24 per cent to AU$0.79, rare earth miner Lynas Corporation Limited (ASX:LYC) was down 3.92 per cent to AU$0.0490 and coalmining company Whitehaven Coal Limited (ASX:WHC) slumped 3.44 per cent to AU$1.54. All three were the biggest losers on the S&P/ASX 200. Lynas warned that it may find it difficult to honour its commitments to lenders, while its auditors said that the survival of the company may be in significant doubt, according to The Sydney Morning Herald.

Copper miner OZ Minerals Limited (ASX:OZL) was up 2.71 per cent to AU$3.79. It sold its 19.12 per cent stake in rival Sandfire Resources NL (ASX:SFR) at AU$4.20 per share, or AU$125.6 million in total. It paid AU$99.3 million for that holding in 2010, according to The Sydney Morning Herald.

The major energy stocks all ended with losses. Woodside Petroleum Limited (ASX:WPL) was down 0.11 per cent to AU$34.75, Origin Energy Ltd (ASX:ORG) fell 1.03 per cent to AU$11.50, Oil Search Limited (ASX:OSH) was down 0.75 per cent to AU$7.89 and Santos Ltd (ASX:STO) lost heavily by 2.60 per cent to AU$7.11.

Amongst retailers, Woolworths Limited (ASX:WOW) lost 0.27 per cent to AU$29.37, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, fell 0.71 per cent to AU$43.35 and Myer Holdings Ltd (ASX:MYR) slipped 1.57 per cent to AU$1.57.

Telstra Corporation Ltd (ASX:TLS) was down 1.43 per cent to AU$6.20.

However airlines were a firm feature on the exchange. Qantas Airways Limited (ASX:QAN) moved up 1.32 per cent to AU$3.06, and Virgin Australia Holdings Ltd (ASX:VAH) gained 1.03 per cent to AU$0.490.

Internet service provider and telecommunications company iiNet Limited (ASX:IIN) was the top gainer on the S&P/ASX 200, vaulting nearly 25 per cent to AU$8.50 on news that competitor TPG Telecom Ltd (ASX:TPM) had launched a takeover offer valuing it at AU$1.4 billion. “The Board views this as a significant reward for shareholders who have shown their faith in iiNet,” said iiNet Chairman Michael Smith. “The price of AU$1.4 billion is a very tangible measure of the value that the extraordinary people of iiNet have created through their innovation, brilliant service and capacity to add value.”

In breaking news, a consortium of PE firm KKR & Co. L.P. (NYSE:KKR), alternative investment manager Varde Partners and Deutsche Bank AG (FRA:DBK) has sealed a deal to acquire GE Capital’s Australian and New Zealand consumer lending business for an enterprise value of AU$8.2 billion, according to a report this morning in The Sydney Morning Herald. "This transaction allows us to focus on our strategy to be the world's premier infrastructure technology company with a speciality commercial financial services business," GE Australia and New Zealand president and chief executive Geoff Culbert said. "We will continue to work with our customers in key industries including oil and gas, energy, healthcare, aviation and mining." This is one of the largest transactions seen in Australia.

Economic news, currency and insight

According to data from the Australian Bureau of Statistics, personal and commercial finance both surged higher in January, as borrowers move to take advantage of the low interest rate environment, said The Australian. Personal lending was up 3.4 per cent to AU$8.71 billion, up from AU$8.42 billion in December. Business finance commitments shot up 13.7 per cent to AU$43.77 billion, compared to AU$38.50 billion.

The Reserve Bank of Australia will release the minutes from its March board meeting on Tuesday, March 17.

The Aussie was trading at the 76.23 US cents at 06:30 this morning (AEDT), down from 76.75 US cents on Friday, pressured by continued strength in the US dollar.

The Australian stock market is likely to open lower today given that March ASX SPI200 Index (AP) Futures was down 11 points at 5,801.00 at 06:59 this morning (AEDT).


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