banks and consumer sectors push the asx 200 higher for the second consecutive session 1418302015

Australian stocks in the consumer sectors, including retail, received a shot in the arm from the federal budget presented Wednesday, which handed a major concession to small businesses by allowing them to instantly write off assets worth a maximum of AU$20,000 on an unlimited number of items. Investors figured this allowance would boost sales in the retail sector.

Harvey Norman Holdings Limited (ASX:HVN) chairman Gerry Harvey said the budget package in favour of small businesses was so good for retailers that they might have written it themselves, according to The Sydney Morning Herald. "I wrote the budget and [Treasurer] Joe Hockey read it," he quipped. "In the meantime, we'll have ads going. From our point of view, it certainly is advantageous."

Overall, the benchmark S&P/ASX 200 index closed higher for the second consecutive session, with banks also adding to the post-budget bullish fervour. Markets appreciated that the budget forecast a smaller than expected fiscal deficit of AU$35.1 billion, as well as its bias in favour of smaller businesses. The local factors outweighed bearish cues from overnight losses on Wall Street as well as the global bonds rout.

Indices and sectors

The benchmark S&P/ASX 200 on Wednesday rose 40.4 points, or 0.7 per cent, and closed at 5,715.1, while the broader All Ordinaries index was up 37.7 points, or 0.7 per cent, at 5,710.8.

The best gaining sectors were consumer staples (+1.63 per cent), consumer discretionary (+1.20 per cent), real estate investment trusts (+1.03 per cent) and industrials (+1.00 per cent). Utilities (-0.41 per cent) was the main losing sector.

Stocks

In mining stocks, BHP Billiton Limited (ASX:BHP) fell 0.09 per cent to AU$32.50, Rio Tinto Limited (ASX:RIO) was down 0.39 per cent to AU$59.02 and Fortescue Metals Group Limited (ASX:FMG) slipped 2.33 per cent to AU$2.51. Mount Gibson Iron Limited (ASX:MGX) gained 4.17 per cent to AU$0.250 and BC Iron Limited (ASX:BCI) shed 2.13 per cent to AU$0.460. Stocks in the sector were subdued after the release of disappointing Chinese economic data for April that missed estimates on retail sales, industrial production and fixed asset investment.

In energy, which benefited from the recent firm trend in crude oil prices, Woodside Petroleum Limited (ASX:WPL) jumped 0.58 per cent to AU$34.71, Origin Energy Ltd (ASX:ORG) gained 1.71 per cent to AU$13.10, Oil Search Limited (ASX:OSH) fell 0.26 per cent to AU$7.71 and Santos Ltd (ASX:STO) was up 0.58 per cent to AU$8.71.

Banks staged a comeback on Wednesday. Commonwealth Bank of Australia (ASX:CBA) rose 1.33 per cent to AU$83.98, Westpac Banking Corp (ASX:WBC) was higher by 0.42 per cent to AU$33.27, Australia and New Zealand Banking Group (ASX:ANZ) surged 2.16 per cent to AU$33.11 and National Australia Bank Ltd. (ASX:NAB) shot up 3.21 per cent to AU$35.65.

Telecommunications stocks closed mostly down except Telstra Corporation Ltd (ASX:TLS), which gained 0.65 per cent to AU$6.15, and TPG Telecom Ltd (ASX:TPM), up 0.11 per cent to AU$9.00. However, iiNet Limited (ASX:IIN) gave up 0.70 per cent to AU$9.18 and M2 Group Ltd (ASX:MTU) declined 0.45 per cent to AU$11.04.

Amongst retailers, which generally had a good day yesterday courtesy of the federal budget, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, shot up 1.49 per cent to AU$44.15, Woolworths Limited (ASX:WOW) surged 2.63 per cent to AU$28.50 and Caltex Australia Limited (ASX:CTX) was up 0.24 per cent to AU$32.80. However, Myer Holdings Ltd (ASX:MYR) stole the show, rising over 10 per cent to AU$1.55. Myer was the top gainer on the S&P/ASX 200 yesterday, and investors scooped up the stock after the retailer declared third-quarter sales in line with expectations.

In airlines, Qantas Airways Limited (ASX:QAN) continued its bull run with another gain of 0.56 per cent, closing at AU$3.58. Rival Virgin Australia Holdings Ltd (ASX:VAH), however, fell 2.00 per cent to AU$0.490.

Economic news, currency and insight

Data for the March quarter on Australia’s wage costs showed that the country’s wages are growing at their slowest pace since records started being maintained. According to figures from the Bureau of Statistics, wages rose by 0.5 per cent during the March quarter compared to the previous quarter, while they were up 2.3 per cent on a year-on-year basis. With this result, the annual wage growth index has declined in 10 of the past 11 quarters, according to JP Morgan economist Tom Kennedy, and as reported by ABC. "Most of the drag came from the private sector, where wages increased just 0.4 per cent compared to the prior quarter, the slowest quarterly pace of income growth since the global financial crisis," he said.

On Wall Street, stocks ended more or less flat on Wednesday, as the market waited for fresh triggers following the end of the earnings season, according to Reuters. "You're now heading from an earnings-centric market to a macro-focused market," said Andrew Frankel, co-president of Stuart Frankel & Co in New York. "People seem to be in watch mode as they get an understanding of what's next." The Dow Jones Industrial Average fell 7.574 points, or 0.04 percent, to 18,060.49, the S&P 500 lost 0.64 points, or 0.03 percent, to 2,098.47 and the Nasdaq Composite added 5.50 points, or 0.11 percent, to 4,981.69.

The Australian dollar was boosted by weak US retail sales data that ignited hopes for a delay in the interest rate hike by the US Fed, according to Business Spectator. At 07:00 this morning (AEST), the Australian dollar was trading at 81.14 US cents, up sharply from 79.77 US cents on Wednesday.

The Australian stock market is likely to open lower today given that at 6.50 am (AEST) today, the June ASX SPI200 Index (AP) Futures was down by 23 points at 5,682.