australian stocks surge higher by 1 5 per cent friday on higher commodities and record nasdaq close

Australian stocks put in a stellar performance Friday, gaining 1.5 per cent in a solid rally led by the mining and energy sectors which continued to build on their strong gains achieved in the previous trading session. Such was the strength of the move that no single sector declined for the day. Australian stocks, apart from benefiting from higher commodity prices, also took note of the goings-on on Wall Street, where the Nasdaq index made history of its previous peak made at the time of the tech bubble in the year 2000, and closed at a fresh 15-year high.

“If you take a step back, the mining sector is up about 4 per cent this week, but that comes after it fell by around 6 per cent the week before,” said CommSec market analyst Steven Daghlian, as quoted by The Australian. “It’s been a pretty volatile ride over the last few days and weeks. But today has been the best day for the market in about five weeks.”

In market action, both the major indices jumped higher in the opening hour of trade, continued grinding higher till about 1 PM, and thereafter entered sideways trading until the close of the session.

The ease with which the S&P/ASX 200 sliced through the line at 5,900 shows that, this time around, the market could very well take a successful shy at the hitherto insurmountable resistance at 6,000.

Indices and sectors

The benchmark S&P/ASX 200 on Friday gained 88.5 points, or 1.5 per cent, and closed at 5,933.3, while the broader All Ordinaries index was up 86.5 points, or 1.5 per cent, at 5,906.8.

All the sectors ended in the black. The top gaining sectors on the day were energy (+2.63 per cent), materials (+2.33 per cent), utilities (+2.23 per cent), consumer discretionary (+2.11 per cent) and consumer staples (+1.72 per cent).

Stocks

In the energy sector, the best performer of the day, Woodside Petroleum Limited (ASX:WPL) shot up 1.72 per cent to AU$35.40, Origin Energy Ltd (ASX:ORG) surged 3.96 per cent to AU$12.87, Oil Search Limited (ASX:OSH) jumped 2.84 per cent to AU$8.32 and Santos Ltd (ASX:STO) was up 2.56 per cent to AU$8.00. Liquefied Natural Gas Ltd (ASX:LNG) was the top gainer on the S&P/ASX 200, up 15.66 per cent to AU$4.80. Senex Energy Ltd (ASX:SXY) rose 10.98 per cent to AU$0.455, and was the third highest gainer on that index. Energy stocks were boosted by the continued strength in global crude oil prices.

Amongst mining stocks, BHP Billiton Limited (ASX:BHP) jumped 3.19 per cent to AU$32.05, Rio Tinto Limited (ASX:RIO) gained 2.65 per cent to AU$57.79, and Fortescue Metals Group Limited (ASX:FMG) shot up 5.74 per cent to AU$2.21. BC Iron Limited (ASX:BCI) was up 5.00 per cent to AU$0.420 and Mount Gibson Iron Limited ASX:MGX) gained 7.69 per cent to AU$0.210. Investors scooped up shares in the sector after iron ore prices moved up sharply to US$54.82 per tonne on Thursday, according to The Sydney Morning Herald.

The Business Spectator said this morning that at the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at US$57.00 a tonne, up 22 per cent from the decade low of US$46.7 a tonne touched earlier this month, and raising speculation that iron ore had now swung into a bull market.

In consumer retail, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, gained 1.19 per cent to AU$42.63, Woolworths Limited (ASX:WOW) rose a sharp 2.88 per cent to AU$28.91, Caltex Australia Limited (ASX:CTX) was up 0.60 per cent to AU$35.50 and Myer Holdings Ltd (ASX:MYR) went up 0.76 per cent to AU$1.33.

In the four major banks, Commonwealth Bank of Australia (ASX:CBA) shot up 1.52 per cent to AU$92.10, Westpac Banking Corp (ASX:WBC) gained 0.63 per cent to AU$38.42, Australia and New Zealand Banking Group (ASX:ANZ) was up 1.30 per cent to AU$35.72 and National Australia Bank Ltd. (ASX:NAB) rose 0.61 per cent to AU$38.07.

In the telecom sector, Telstra Corporation Ltd (ASX:TLS) was up 0.96 per cent to AU$6.32, TPG Telecom Ltd (ASX:TPM) gained 0.95 per cent to AU$9.60 and iiNet Limited (ASX:IIN) rose 0.23 per cent to AU$8.66.

Economic news, currency and insight

Some analysts are wary of the recent strength in iron ore prices, fearing it might be just a bear rally. Though the recent announcement by BHP Billiton Limited (ASX:BHP) to cut back on its capital expenditure at Port Hedland, as well as statistics that showed iron ore exports out of Australia have been flat over the past six months, were bullish factors on the supply side demand is still weak. "People are starting to speculate that Chinese demand could peak next year or the year after, which would cut out some very large increments of demand," said Kate Howitt, portfolio manager of the Fidelity Australian Opportunities Fund, as per The Sydney Morning Herald.

On Wall Street, Friday marked the end of a historic week with the NASDAQ composite as well as the S&P 500 both closing at record highs. According to USA Today, this was the first time that both indices were perched at new highs since the market top made during the dot-com bubble in the year 2000. The Nasdaq jumped 36.02 points, or 0.7 per cent, to end at 5092.08 for its second record close in a row. The S&P rose for a fifth straight day, gaining 4.76 points, or 0.2 per cent, to 2117.69, just scraping past its previous record close of 2117.39 on March 2. The Dow Jones Industrial Average rose 21.45 points, or 0.1 per cent, to 18,080.14.

The Australian dollar has shown strength following the rise in commodity prices such as crude oil and iron ore, as well as weakness in the US dollar following softer than expected US economic data. At 07:00 this morning (AEST), the Australian dollar was trading at 78.23 US cents, up from 78.10 US cents on Friday, according to the Business Spectator.

The Australian stock market is likely to open higher today given that at 06:45 this morning (AEST), the June ASX SPI200 Index (AP) Futures was trading up by 24 points at 5,962.0.