australian stocks end the week on a strong note shrugging off currency woes 1437892015

The Australian stock market had a decent close in positive territory on Friday, led by gains in mining, retailer and banking stocks, as well as the sentimental boost from overnight gains on Wall Street which saw the S&P 500 close at another record high. Investors continued to buy into the larger retailers based on the perceived gains due to the federal budget proposals in favour of small scale businesses.

For the time being, at least, investors appeared to have laid aside some of their worries of the impact of the recent strength in the Australian dollar on the country’s exporting companies.

In market action, sharp opening gains in the S&P/ASX 200, which peaked at 5,747.00 in the first hour of trading, could not be sustained, and by 3 PM, the index had fallen to the day’s low of 5,696.60. However, a rally in the closing hour ensured that the index closed with net gains for the day.

Indices and sectors

The benchmark S&P/ASX 200 on Friday rose 38.9 points, or 0.7 per cent, and closed at 5,735.5, while the broader All Ordinaries index was up 37.5 points, or 0.7 per cent, at 5,730.0.

The best gaining sectors were healthcare (+1.34 per cent), real estate investment trusts (+1.25 per cent), consumer discretionary (+1.24 per cent), materials (+1.24 per cent) and consumer staples (+1.18 per cent). Energy (-0.70 per cent) was the only sector to close in the red.

Stocks

Mining stocks put up a mixed show on Friday. BHP Billiton Limited (ASX:BHP) jumped 1.63 per cent to AU$32.49, Rio Tinto Limited (ASX:RIO) was up 0.69 per cent to AU$58.10 but Fortescue Metals Group Limited (ASX:FMG) lost 0.87 per cent to close at AU$2.29. BC Iron Limited (ASX:BCI) fell 2.27 per cent to AU$0.43 and Mount Gibson Iron Limited (ASX:MGX) slumped 4 per cent to AU$0.24.

Energy stocks were on the back foot at the close of the week, as global crude prices paused after their recent sharp gains. Though Woodside Petroleum Limited (ASX:WPL) closed unchanged at AU$35.00, Santos Ltd (ASX:STO) was down 1.97 per cent to AU$8.46, Oil Search Limited (ASX:OSH) fell 0.79 per cent to AU$7.52, and Origin Energy Ltd (ASX:ORG) shed 0.31 per cent to AU$13.06.

Led by Commonwealth Bank of Australia (ASX:CBA), which jumped a solid 1.35 per cent to AU$84.75, the large banks ended with gains. Westpac Banking Corp (ASX:WBC) was up 0.06 per cent to AU$33.05, National Australia Bank Ltd. (ASX:NAB) was up a similar percentage to AU$34.52 and Australia New Zealand rose 0.30 per cent to AU$33.12.

Retailers and supermarkets continued to forge ahead propelled by the federal budget’s favourable proposals for small business. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was up 0.90 per cent to AU$44.97, Woolworths Limited (ASX:WOW) gained sharply by 1.47 per cent to close at AU$29.00 and Myer Holdings Ltd (ASX:MYR) surged 2.97 per cent to AU$1.56. However, Caltex Australia Limited (ASX:CTX) came off 1.44 per cent to AU$32.19. Metcash Limited (ASX:MTS), a struggling marketing and wholesale distribution company specialising in grocery, fresh produce, liquor, hardware and automotive parts and accessories, surged 12.06 per cent to AU$1.44 on the company’s announcement that it is considering a spin-off for its auto division as a result of its strategic review of operations. The stock was the top gainer on the S&P/ASX 200 Friday.

In telecommunications, Telstra Corporation Ltd (ASX:TLS) rose 0.81 per cent to AU$6.20, M2 Group Ltd (ASX:MTU) shot up 2.21 per cent to AU$11.09, TPG Telecom Ltd (ASX:TPM) was unchanged at AU$9.00 and iiNet Limited (ASX:IIN) shed 0.51 per cent to AU$9.79.

In airlines, Qantas Airways Limited (ASX:QAN) lost over 2 per cent at AU$3.60 but rival Virgin Australia Holdings Ltd (ASX:VAH) gained 1.01 per cent to AU$0.50.

Economic news, currency and insight

A call for parliamentary inquiry into alleged predatory iron ore supplies and pricing by BHP Billiton Limited (ASX:BHP) and Rio Tinto Limited (ASX:RIO) by Fortescue Metals Group Limited (ASX:FMG) chairman Andrew Forrest has driven a wedge into Australia’s Federal Cabinet, which is caught inside the dilemma of the need to protect smaller domestic miners on the one hand, and appearing to be protectionist in favour of its own industry opposite its trade partners, on the other. According to the ABC, both Trade Minister Andrew Robb and Industry Minister Ian Macfarlane fear that the proposed investigation into the iron ore industry by a joint House-Senate select committee inquiry will be viewed by Australia’s trading partners as interference into market forces.

"Australia has been a global champion of free trade and open markets," said Andrew Harding, Chief Executive of iron ore for Rio Tinto Limited (ASX:RIO). "These have underpinned our economic development. We should be careful not to disturb this hard-earned reputation.” Last week, Prime Minister Tony Abbott declared his support for the inquiry. "I think we do need an inquiry," Mr Abbott told radio station 2GB, according to The Sydney Morning Herald. "I think we do need to know the facts of what's going on here because I am conscious of the claims that are being made by Andrew Forrest and others. What we don't want to see is predatory behaviour by any company."

On Wall Street, though the S&P500 managed to close at yet another record high, stocks ended relatively flat on Friday as investors digested some weak economic data, according to Reuters. The Dow Jones industrial average rose 20.32 points, or 0.11 percent, to 18,272.56, the S&P 500 gained 1.63 points, or 0.08 percent, to 2,122.73 and the Nasdaq Composite dropped 2.50 points, or 0.05 percent, to 5,048.29.

The Australian dollar was bolstered by weakness in the greenback due to recent weak economic data, though the currency thereafter shed some of its gains, according to Business Spectator. At 07:00 this morning (AEST), the Aussie was trading at 80.39 US cents, down from 80.47 US cents on Friday.

The Australian stock market is likely to open flat today given that the June ASX SPI200 Index (AP) Futures was up by 2 points at 5,749.