australian stocks end higher after six days of losses 904142014

The energy sector outperforms other sectors by a wide margin

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By :  ,  Financial Analyst

The US Fed hinted that the day of the first interest rate hike could be drawing nearer, with the language was couched inside a fairly dovish statement that did away with the “considerable time” language. However, it said instead that “the committee judges it can be patient” about when to commence normalisation of monetary policy. Importantly, Fed Chair Yellen clarified in the press conference that “the statement of patience should be interpreted as [policymakers being] unlikely to begin normalisation for at least the next couple of meetings,” she said.

In response, the dollar index shot higher, and appeared to be back on its uptrend, while US stocks ended with solid gains. Both the S&P500 and the Nasdaq closed higher by over 2 per cent, while the Dow Jones Industrial Average jumped 1.69 per cent.

The Australian dollar, already labouring under the bearish sentiment surrounding commodity currencies, had cracked through the 82 cents level yesterday, the first time since June 2010. It received a fresh downward nudge after the Fed statement, as traders realised that US interest rate hikes were drawing inexorably nearer. At 08:23 today (AEDT) the Aussie was trading at 81.16 cents, down from 81.75 cents just before the Fed meeting.

The ASX managed to eke out a hair’s breadth gain after six days of losses. The S&P/ASX 200 Index and the broader All Ordinaries Index each gained 0.2 per cent to 5,161.9 points and 5,140.6 points respectively, bolstered chiefly by gains of 2.94 per cent in the energy sector. Woodside Petroleum Limited (ASX:WPL) gained 3.02 per cent to AU$35.50, Santos Ltd (ASX:STO) was up 4.26 per cent to AU$7.58 and Senex Energy Ltd (ASX:SXY) zoomed 10.53 per cent to AU$0.315 amidst determined bargain hunting. "No one can credibly tell you that they know what is going on in energy markets at the moment,” said Pengana Global Resources Fund portfolio manager Ric Ronge. “There are so many moving parts. We have seen a return to volatility as traders lurch from one data-point to another in quite a reactionary way," he added.

Later, crude turned bullish after the US reported falling crude inventories. US crude closed 54 cents higher at $56.47 per barrel after surging to a high of $58.98 – it touched its lowest level since May 2009 at $53.60 on Tuesday, according to Reuters.

On the flip side, however, Woodside's AU$4.6 billion acquisition of two liquefied natural gas projects from Apache earlier in the week did not find favour with ratings agency Fitch. "While Woodside's ratings are not immediately affected by the announced transaction with Apache, its ratings could come under pressure if its funding requirements add a material amount of debt such that its financial leverage increases to levels not commensurate with its BBB+ ratings for a sustained period of time," Fitch Ratings director Sajal Kishore said, according to The Sydney Morning Herald.

Despite continued bearishness in iron ore prices, miners too headed higher, led by BC Iron Limited (ASX:BCI), which climbed 16.67 per cent to AU$0.420 and was the top gainer on the S&P/ASX200. BHP Billiton Limited (ASX:BHP) was up 0.33 per cent to AU$ 27.51, Rio Tinto Limited (ASX:RIO) gained 1.39 per cent to AU$53.38, and Atlas Iron Limited (ASX:AGO) put on 3.45 per cent to close at AU$0.150.

New listings did poorly. Ooh!Media Group Pty Ltd (ASX:OOH) which listed yesterday closed at AU$1.90, off its IPO issue price of AU$1.93, and Latam Autos Ltd (ASX:LAA) ended its first day of trade at AU$0.245 cents, well below its offer price of 30 cents.

Find up to date information on the ASX at City Index.

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