australian stocks power higher in late reaction to greek deal 1700772015

Australian stocks rocketed nearly 2 per cent on Tuesday, finally discounting the news of Greece’s deal with international creditors, which had become public only after the close of trading at the ASX the previous day. The powerful surge lifted all sectors into positive territory, with mining shares leading from the front, as investors relished that Grexit was no longer a concern.

Indices and sectors

The benchmark S&P/ASX 200 rose 104.2 points, or 1.9 per cent, and closed at 5,577.4, while the broader All Ordinaries index was up 101.5 points, or 1.8 per cent, at 5,561.9.

The top gaining sectors were materials (+2.56 per cent), information technology (+2.51 per cent), healthcare (+2.35 per cent) and real estate investment trusts (+2.28 per cent), consumer staples (+2.10 per cent) and utilities (+2.03 per cent). There were no losing sectors for the day.

Stocks

Mining stocks were among the best performers of the day. BHP Billiton Limited (ASX:BHP) vaulted 2.61 per cent to AU$27.10, Rio Tinto Limited (ASX:RIO) jumped nearly 3 per cent to AU$53.07 and Fortescue Metals Group Limited (ASX:FMG) surged 3.77 per cent to AU$1.79. Mid-tier mining company Sandfire Resources NL (ASX:SFR) jumped 12.12 per cent to AU$6.29 and was the top gainer on the S&P/ASX 200 on the announcement of a new discovery from its diamond drilling project.

Energy stocks moved higher despite soft crude prices following the Iran nuclear deal. Woodside Petroleum Limited (ASX:WPL) was up 2.08 per cent to AU$33.90, Origin Energy Ltd (ASX:ORG) gained 0.18 per cent at AU$11.23, Oil Search Limited (ASX:OSH) moved up 1.02 per cent to AU$6.96 and Santos Ltd (ASX:STO) jumped 1.74 per cent to AU$7.61.

The big banks put up a strong show too. Commonwealth Bank of Australia (ASX:CBA) was up 1.26 per cent to AU$86.25, Westpac Banking Corp (ASX:WBC) closed higher by nearly 2 per cent at AU$33.61, Australia and New Zealand Banking Group (ASX:ANZ) gained 0.94 per cent at AU$32.20 and National Australia Bank Ltd. (ASX:NAB) jumped 1.79 per cent at AU$33.47.

Retail stocks were a sea of green. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, jumped 2.22 per cent to AU$40.55, Woolworths Limited (ASX:WOW) gained 2.21 per cent to AU$27.72, Caltex Australia Limited (ASX:CTX) surged 2.39 per cent to AU$33.41 and Myer Holdings Ltd (ASX:MYR) was up 1.64 per cent to AU$1.24.

Economic news, currency and market outlook

According to Federal Treasurer Joe Hockey, the Australian economy remained unaffected by the economic turmoil in China following its stocks collapse, as well as the political upheavals related to Greece and the Eurozone. "We have momentum building in the Australian economy, it is not affected by what's happening in either Greece or China," said Mr. Hockey, according to thrABC. "So far as I am concerned and the Treasury is concerned, our budget forecasts for the Chinese economy remain unchanged," he added.

Data from the NAB monthly survey showed that business confidence rose from 8 to 10 points in June, its best level since September 2013, led by improving business conditions. However, the survey revealed that hiring for jobs was still subdued, moving from -12 to +1 during June, due largely to sluggish business investment, according to ABC.

In his first interview after resigning as Greek finance Minister, Yanis Varoufakis strongly criticised the latest bailout deal agreed by Greek Prime Minister Alexis Tsipras, calling it the “politics of humiliation.” “This has nothing to do with economics. It has nothing to do with putting Greece on the way to recovery,” he said, as quoted by the ABC. “This is a new Versailles Treaty that is haunting Europe again, and the prime minister knows it. He knows that he’s damned if he does and he’s damned if he doesn’t.”

Stocks closed sharply higher on Wall Street consolidating previous gains arising from the Greek deal with its creditors, with increasing focus on earnings reports. The Dow Jones Industrial Average climbed 76 points, or 0.4 per cent, to 18,054. The S&P 500 edged up 9 points, or 0.5 per cent, to 2,109 and the Nasdaq Composite gained 33 points, or 0.7 per cent, to 5,105.

The Australian dollar is trading higher mainly due to weakness in the US dollar following soft US retail sales data. At 07:00 this morning (AEST) the local currency was trading at 74.54 US cents, up from 74.28 US cents on Tuesday.

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 15 points at 5,533.