australian stocks reverse from the lows end flat on shanghais rally 1677312015

Australian stocks took a pause from the previous session’s bearish trend, ending more or less flat, as investors noted the rebound in the Chinese stock markets, and looked forward to a corrective rally in iron ore prices. Positive local employment data also aided sentiment.

But the bounce in the Chinese stock markets may be short lived. "We've seen supportive measures from the government over the last couple of days finally having a bit of an impact on the market in the day's trading," said Michael Every, head of equity market research in the Asia-Pacific region at Rabobank, as quoted by ABC. "But with 70 per cent of the market frozen, only 30 per cent allowed to trade, and everyone having to buy, naturally you've had a near-term bounce. I don't think that reflects fundamentals at all."

Indices and sectors

The benchmark S&P/ASX 200 rose 1.5 points, or 0.0 per cent, and closed at 5,471, while the broader All Ordinaries index was down 0.2 points, or 0.0 per cent, at 5,456.3.

The main gaining sectors were materials (+1.47 per cent), industrials (+0.29 per cent) and telecommunication (+0.25 per cent). The significant losing sectors were utilities (-1.26 per cent), information technology (-0.42 per cent), consumer staples (-0.40 per cent) and real estate investment trusts (-0.39 per cent).

Stocks

Mining was the bright spot on a flat day. BHP Billiton Limited (ASX:BHP) gained 1.77 per cent to AU$25.88, Rio Tinto Limited (ASX:RIO) jumped 1.66 per cent to AU$50.89 and Fortescue Metals Group Limited (ASX:FMG) soared 6.57 per cent to AU$1.78.

In energy, which closed mixed, Woodside Petroleum Limited (ASX:WPL) was down 0.3 per cent to AU$33.52, Origin Energy Ltd (ASX:ORG) gained 1.26 per cent to AU$11.27, Oil Search Limited (ASX:OSH) shed 0.29 per cent to AU$6.81 and Santos Ltd (ASX:STO) was up 0.40 per cent to AU$7.48.

The large banks all closed in the red. Commonwealth Bank of Australia (ASX:CBA) was down 0.2 per cent to AU$85.60, Westpac Banking Corp (ASX:WBC) dipped 0.84 per cent to AU$32.88, Australia and New Zealand Banking Group (ASX:ANZ) was down 0.19 per cent to AU$32.21 and National Australia Bank Ltd. (ASX:NAB) fell 0.60 per cent to AU$33.13.

The retail sector put up a mixed show. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, gained 0.48 per cent to AU$39.91, Woolworths Limited (ASX:WOW) slumped 1.79 per cent to AU$26.83, Caltex Australia Limited (ASX:CTX) fell 1.44 per cent to AU$32.89 and Myer Holdings Ltd (ASX:MYR) was up 0.80 per cent to AU$1.25.

Economic news, currency and market outlook

According to real estate agents, Chinese buyers of Australian real estate have become more cautious following the sharp losses in the Chinese share markets. Some younger and inexperienced investors burnt their fingers in the stock crash and may have to sell their Australian properties, according to Michael Pallier, principal at Sydney Sothebys International Realty, as quoted by ABC.

Data released by the Bureau of Statistics showed that the economy added 24,500 full-time jobs in June, offsetting a decrease of 17,200 numbers in part-time positions, and surpassing estimates of no jobs to be added. The unemployment rate remained unchanged at 6 per cent, while the participation rate moved up 0.1 per cent to 64.8 per cent, as per ABC.

Stocks closed higher on Wall Street as Chinese stock markets appeared to stabilise following measures taken by the country’s government, and investors hoped there still might be a deal between Greece and its creditors. The Dow Jones Industrial Average rose 33.2 points, or 0.19 percent, to end at 17,548.62. The S&P 500 gained 4.63 points, or 0.23 percent, to 2,051.31 and the Nasdaq Composite added 12.64 points, or 0.26 percent, to 4,922.40.

The Australian dollar is trading soft despite positive Australian employment data, a rebound in Chinese stocks and a new bailout proposal from the Greeks, according to Business Spectator. At 07:00 this morning (AEST) the local currency was trading at 74.49 US cents, down from 74.77 US cents on Thursday.

The Australian stock market is likely to open lower today given that at 06:45 am (AEST) this morning the September ASX SPI200 Index (AP) Futures was down 20 points at 5,388.