australian stocks surge higher despite the greek drama 1644682015

Canadian infrastructure giant Brookfield makes an AU$9 billion takeover bid for Asciano Ltd

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By :  ,  Financial Analyst

Investors on the ASX cold-shouldered news of Greece’s default on an IMF loan repayment, choosing to focus instead on stock bargains in the local market thereby sending the benchmark indices higher by 1 per cent. A strong show by the energy and financial sectors helped to rally the market, marking an auspicious beginning to the financial year. A takeover offer for Australian freight and logistics company Asciano by Canadian giant Brookfield also boosted market sentiment.

Indices and sectors

The benchmark S&P/ASX 200 rose 56.7 points, or 1.0 per cent, and closed at 5,515.7, while the broader All Ordinaries index was up 54.8 points, or 1.0 per cent, at 5,506.

The top gaining sectors were industrials (+3.92 per cent), healthcare (+2.10 per cent), consumer discretionary (+1.57 per cent), real estate investment trusts (+1.30 per cent), energy (+1.27 per cent) and financials (+1.10 per cent). Materials (-0.65 per cent) was the only losing sector.


The large mining stocks all ended in the red. BHP Billiton Limited (ASX:BHP) slipped 1.48 per cent to AU$26.65, Rio Tinto Limited (ASX:RIO) was down 1.38 per cent to AU$53.01 and Fortescue Metals Group Limited (ASX:FMG) fell 4.19 per cent to AU$1.83. The latter was the second-biggest loser on the S&P/ASX 200. Benchmark iron ore prices in China have fallen in recent trading sessions, while Australia cut its official forecast for the iron ore price.

In energy, Woodside Petroleum Limited (ASX:WPL) gained 1.26 per cent to AU$34.68, Oil Search Limited (ASX:OSH) was up 2.38 per cent to AU$7.30 and Santos Ltd (ASX:STO) gained 2.68 per cent to AU$8.04. However, Origin Energy Ltd (ASX:ORG) fell 0.42 per cent to AU$11.92. Liquefied Natural Gas Ltd (ASX:LNG) gained 7.09 per cent to AU$4.08 and was the fourth biggest gainer on the S&P/ASX 200.

The big banks continued their upside momentum. Commonwealth Bank of Australia (ASX:CBA) rose 1.05 per cent to AU$86.02, Westpac Banking Corp (ASX:WBC) was up 0.72 per cent to AU$32.38, Australia and New Zealand Banking Group (ASX:ANZ) gained 0.93 per cent to AU$32.50 and National Australia Bank Ltd. (ASX:NAB) moved up 0.48 per cent to AU$33.47.

Asciano Ltd (ASX:AIO) was the top gainer on the S&P/ASX 200, surging 16.84 per cent to AU$7.77 on news that the giant Brookfield Infrastructure Group had made a conditional offer for the company valued at nearly AU$9 billion, according to The Australian. Asciano confirmed in a statement to the ASX that it had received a cash and shares offer worth AU$9.05 per share on Sunday, and that the directors decided it was in shareholders’ best interests to engage with Brookfield in an attempt to pursue a deal, as reported by ABC.

Economic news, currency and market outlook

Latest data from CoreLogic showed that recent interest rate cuts have refreshed the boom in the property markets in Melbourne and Sydney, though the slide continued in markets such as Perth and Darwin, according to the ABC. The CoreLogic RP Data home value index for Australia’s capital cities jumped 2.1 per cent in June, leading to a 9.8 per cent rise year-on-year.

Official figures from Australia’s Bureau of Statistics showed that the number of building approvals continued near record highs, indicating that housing construction was one of the economy’s few robust sectors, said the ABC. With 19,414 new dwellings being approved for construction in May, the number of approvals rose 2.5 per cent for the month and 17.6 per cent year-on-year.

Stocks closed higher on Wall Street Tuesday following news that Greece had sent a fresh bailout proposal to the international creditors raising hopes of a bailout deal. The Dow Jones Industrial Average advanced 138 points, or 0.8 per cent, to 17,758, the S&P 500 gained 14 points, or 0.7 per cent, to 2,077, and the Nasdaq Composite rose 26 points, or 0.5 per cent, to 5,013.

The Australian dollar is trading lower following strength in the US dollar due to strong economic data and a climb down by Greece in bailout negotiations. According to the Business Spectator, at 06:30 this morning (AEST) the local currency was trading at 76.49 US cents, down from 77.16 US cents on Wednesday.

The Australian stock market is likely to open more or less unchanged today given that at 06:59 am (AEST) this morning the September ASX SPI200 Index (AP) Futures was down 3 points at 5,475.

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