australian stocks rally to a nearly seven year high boosted by earnings and ma 1037032015

Barring see-saw trade in the opening hour, during which the S&P/ASX 200 touched a low of 5,845.6, Australian stocks were in a strong bull grip for the entire session Wednesday. The benchmark raced past the psychological 5,900 level and ended at the day’s best mark of 5,915.7, the highest levels seen since May 2008.

Sentiments were boosted by the likelihood of a last-minute resolution of the Greek debt crisis, the well-received earnings report from Woodside Petroleum Ltd (ASX:WPL) and the takeover offer by Japan Post for Toll Holdings Ltd (ASX:TOL) at a solid premium.

Indices and sectors

The benchmark S&P/ASX 200 soared 55.6 points, or 0.9 per cent, and closed at 5,877.9, while the broader All Ordinaries index rose 55.6 points, or 0.9 per cent, to 5,877.9.

All the sectors ended in the black. The top gaining sectors were industrials (+3.46 per cent), energy (+3.00 per cent), health care (+1.69 per cent) and materials (+1.20 per cent).

Stocks

The star stock of the day was, without doubt, transportation and logistics services company Toll Holdings Ltd (ASX:TOL), which rocketed 47.20 per cent to AU$8.95 after Japanese financial giant Japan Post Holdings Co Ltd agreed to take over the company for AU$6.5 billion in cash, paying AU$9.04 per share. The combination would create the world’s fifth largest logistics group by revenue after FedEx Corporation (NYSE:FDX), according to Japan Post.

Sirtex Medical Ltd (ASX:SRX) surged 12.29 per cent to AU$33.81 after posting a huge 58 per cent increase in its half yearly net profit to AU$17.7 million on revenues that shot up 37.3 per cent.

On the other hand, Genworth Mortgage Insurance Australia (ASX:GMA) slumped 18.11 per cent to AU$3.32 after the company announced that Westpac Banking Corp (ASX:WBC), the country’s second-biggest lender, had cancelled a sales agreement following a review of its riskier loans, according to Reuters. Given that the deal with Westpac generated nearly 14 per cent of Genworth’s gross premiums during 2014, the cancellation will adversely impact its earnings for 2016. The Genworth stock also turned ex-dividend on Wednesday.

Amongst the miners, BHP Billiton Ltd (ASX:BHP) jumped 1.32 per cent to AU$32.98, though rival Rio Tinto Ltd (ASX:RIO) slid 0.19 per cent to AU$63.38, and Fortescue Metals Group Ltd (ASX:FMG) lost 2.35 per cent to close at AU$2.49. Atlas Iron Ltd (ASX:AGO) was down 2.50 per cent to AU$0.195.

Amongst energy stocks, Woodside Petroleum Ltd (ASX:WPL) shot up 4.41 per cent to AU$36.45, Santos Ltd (ASX:STO) was up 1.47 per cent to AU$8.30, Oil Search Ltd (ASX:OSH) gained 0.59 per cent to AU$8.40 and Origin Energy Ltd (ASX:ORG) rose 2.83 per cent to AU$12.73. The sector was enthused by Woodside’s solid full-year net profit which jumped 38 per cent driven by record revenues despite challenging market conditions and its record, better-than-expected final dividend of AU$1.44 per share (AU$1.84) which was up 40 per cent compared to the year prior. Energy stocks that figured in the top gainers list of the S&P/ASX 200 included Horizon Oil Ltd (ASX:HZN), which soared 8.7 per cent to AU$0.125, Karoon Gas Australia Ltd (ASX:KAR) up 6.51 per cent to AU$2.78 and Liquefied Natural Gas Ltd (ASX:LNG) which bounced 6.06 per cent to AU$3.50.

The four big banks added shoulder to the day’s bull run. Commonwealth Bank of Australia (ASX:CBA) was up 0.79 per cent to AU$90.71, Westpac Banking Corp (ASX:WBC) jumped 0.80 per cent to AU$38.00, Australia and New Zealand Banking Group (ASX:ANZ) was higher by 0.40 per cent to AU$35.13 and National Australia Bank Ltd (ASX:NAB) rose 0.53 per cent to AU$37.76. Macquarie Group Ltd (ASX:MQG) outshone the big banks, rising by 1.11 per cent to AU$71.69.

Domino's Pizza Enterprises Ltd (ASX:DMP) corrected 1.03 per cent per cent to AU$35.55, Telstra Corporation Ltd (ASX:TLS) was up 0.76 per cent at AU$6.63 and Qantas Airways Ltd (ASX:QAN) shot up 2.28 per cent to AU$2.69.

In breaking news, AMP Ltd (ASX:AMP) reported this morning a 32 per cent jump in full-year net profit to AU$884 million, though revenue declined 12 per cent to AU$17.6 billion. The company will pay a final dividend of 13.5 cents per share, according to the Australian.

Fairfax Media Ltd (ASX:FXJ) reported an underlying net profit of AU$86 million for the half-year ended December, down by 0.6 per cent on the year prior, but beating analysts’ expectations of an underlying profit of AU$80 million. The company will repurchase up to 5 per cent of its stock through a share buyback over the next 12 months.

Economic news, currency and insight

The Westpac/Melbourne Institute Leading Index, which tracks the likely growth in economic activity over the next 3 to 9 months, rose by 0.3 per cent in January, predicting that the Australian economy was sluggish and would likely grow at 2.75 per cent during 2015, according to Xinhuanet.

"We still believe that an interest-rate cut in March is the best policy to support domestic demand and maintain downward pressure on the Australian dollar and this outcome remains our forecast," Westpac chief economist Bill Evans said. "The important point, as signalled by the below trend growth in the Leading Index, is that the Australian economy needs more stimulus and the Reserve Bank, with ample scope to cut (by world rather than historical standards) should be acting accordingly," he added.