australian stocks surge nearly two per cent in broad based rally 904362014

The ASX continued to benefit from the Fed-induced Christmas cheer prevailing across global markets and an apparent rebound in commodity prices to end solidly in the black on Monday. The rally helped the major indices finally close at levels higher than those at the beginning of the year, and built on Friday’s powerful gains of 2.5 per cent.

Australian shares have risen 5.6 per cent since last Wednesday, adding over AU$83 billion in terms of market capitalisation, according to The Sydney Morning Herald. "If you're going to call this a Santa Claus rally you couldn't have anything more descriptive," Macquarie Bank division director Martin Lakos said in the paper. "That's a strong rebound, particularly when there had been a lot of nervousness around the volatility of the oil price. I think what we're seeing here is confidence because of the reaffirmation by the US central bank on how they're continuing monetary policy."

The benchmark S&P/ASX200 index was up 103.4 points, or 1.94 per cent, at 5,442.0 points. The broader All Ordinaries index was up 101.4 points, or 1.91 per cent, at 5,414.1 points. Amongst sectors, energy was again the top gainer rising 3.94 per cent, while materials and information technology shot up about 2.5 per cent each. All the sectors ended in the black, though utilities rose the least at 0.25 per cent.

Energy major Woodside Petroleum Ltd (ASX:WPL) gained A$0.93, or 2.46 per cent, to A$38.70, and oil and gas producer Santos Ltd (ASX:STO) advanced A$0.51, or 6.38 per cent, to A$8.50.

Amongst the miners, BHP Billiton Ltd (ASX:BHP) added 86 cents, or 2.97 per cent, to A$29.84, Rio Tinto Ltd (ASX:RIO) rose A$1.44, or 2.56 per cent, to A$57.73, and Fortescue Metals Group Ltd (ASX:FMG) gained A$0.14, or 5.49 per cent, to AU$2.69.

The major banks also put in a strong performance. Commonwealth Bank of Australia (ASX:CBA) shares surged to a record high closing at A$85.35, as investors shrugged off worries over the impact of the Murray report on the bank. According to Bell Potter analyst TS Lim, quoted in The Sydney Morning Herald, the bank’s stock has been moving higher because it generates the most capital amongst its peers and is next in line to pay a dividend given that it will report half-yearly results in February next year. Australia and New Zealand Banking Group (ASX:ANZ) closed higher by 1.29 per cent to A$32.09, National Australia Bank Ltd (ASX:NAB) was up 1.62 per cent at A$33.19 and Westpac Banking Corp (ASX:WBC) rose 1.60 per cent to A$33.00.

Media shares were also in the limelight yesterday, gaining from M&A activity. Fairfax Media Ltd (ASX:FXJ) firmed A$0.015 to A$0.845 cents after it announced the merger of its business with Macquarie Radio Network’s radio businesses. Macquarie Radio Network Ltd (ASX:MRN) shares closed 3 cents higher at A$1.35. Investors drove APN News and Media Ltd (ASX:APN) higher by 4 cents to A$0.78, after it announced its acquisition of Perth radio station 96FM from Fairfax Media for A$78 million.

Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was up 63 cents to A$41.94. Coles will pay A$11.25 million in fines and costs after a court upheld that it had engaged in illegal and unfair conduct in its dealings with suppliers.

Adventure clothing retailer Kathmandu Holdings Ltd (ASX:KMD) plunged A$0.57, or 21.59 per cent, to A$2.07 after it reported disappointing Christmas sales and issued a profit warning. Kathmandu's acting chief executive, Mark Todd, said that Kathmandu's store sales and margins in Australia in Christmas "has been below expectations, which is a reflection of negative consumer confidence and a difficult discretionary retail trading environment,” according to The Sydney Morning Herald.

Speaking to the CourierMail, Martin Lakos noted that the savings ratio in the Australian economy was at highs not seen since 1986, and that households were opting to liquidate debt rather than spend. "It will be interesting to see whether consumers become more active in this Christmas period. There's no doubt that while consumer confidence is still fairly flat, the consumer is very much subdued in their activity," he said. "Hopefully the retailers have a better Christmas, but one suspects consumer confidence is not there enough to see a big spending surge come through."

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