bargain hunting lifts australian stocks in late trade 905462015

The Australian dollar rallies after the release of the US fed minutes

Blue avatar for guest contributors
By :  ,  Financial Analyst

The Australian share market lost ground again Wednesday although it finished well above its worst levels of the session after bargain-hunting emerged in the afternoon. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lost 0.2 per cent to end at 5,353.6 points and 5,334.5 points respectively. The energy, industrials and utilities sectors were the worst performers of the day, losing 1.56, 1.00 and 0.55 per cent respectively.

Stocks continued to be weighed down by negative moves in global markets triggered by the extended falls in crude oil, as well as from the potential political fallout in the event that Greece exits the eurozone. In a risk aversion move, investors were switching out of stocks and into Australian bonds, said The Sydney Morning Herald, observing that Australian government 10 year bond yields fell to a new record low of 2.614 per cent.

Increasingly adverse views expressed by research analysts and ratings agencies soured the outlook for energy stocks. Santos Ltd (ASX:STO) fell 1.3 per cent to AU$7.45 as Credit Suisse analysts observed that the company was essentially worthless if current oil prices and exchange rates persisted. Woodside Petroleum Ltd (ASX:WPL) closed lower by 0.80 per cent to AU$36.14, while Oil Search Ltd (ASX:OSH) was down 1.5 per cent to AU$7.20.

Among resource stocks, Rio Tinto Ltd (ASX:RIO) lost 0.52 per cent at AU$57.29, Fortescue Metals Group Ltd (ASX:FMG) was down 1.79 per cent to AU$2.74, while BHP Billiton Ltd (ASX:BHP) closed unchanged at AU$28.11. Iron ore prices continued their recent firm trend at AU$71.49, the highest in a month on expectations that China intends to accelerate nearly US$1.1 trillion (AU$1.35 trillion) of infrastructure projects this year, and on declining inventories of steelmaking materials in China.

"Battered junior iron ore miners could get a boost in the coming months amid reports that iron ore stock piles in China are close to 11 month lows," Quay Equities head of trading Tristan K'Nell said, according to The Sydney Morning Herald. As per the latest trade balance numbers, there was a big surge in iron ore exports in November and that augurs well for these companies. Miner Arrium Ltd (ASX:ARI) was the top gainer on the ASX, surging 15.91 per cent to AU$0.255. Atlas Iron Ltd (ASX:AGO) was also a strong mover, up 7.84 per cent to AU$0.275. However, Cape Lambert Resources Ltd (ASX:CFE) crashed 16.67 per cent to AU$0.075 on reports that the company had cut 117 jobs, and postponed its second dividend payment scheduled for February 2015.

Amongst banks, Commonwealth Bank of Australia (ASX:CBA) fell 0.2 per cent to AU$85.11, Westpac Banking Corp (ASX:WBC) was down 0.6 per cent to AU$32.69 and Australia and New Zealand Banking Group (ASX:ANZ) last 0.2 per cent to AU$31.72. National Australia Bank Ltd (ASX:NAB) was the lone gainer amongst the major banks, rising 0.2 per cent to AU$33.42.

Qantas Airways Ltd (ASX:QAN) fell 1.92 per cent to AU$2.56, despite being named the world’s safest airline by an aviation website.

The ASX could open higher today given that March SPI 200 Index (AP) Futures last traded at 5,340 at 07:59 (AEDT), up 25 points.

The minutes of the December 16-17 meeting of the US Fed showed that it is unlikely to raise interest rates before late April. The minutes helped clarify that Yellen’s “patient” assurance “indicated that the committee was unlikely to begin the normalisation process for at least the next couple of meetings.” However, members were concerned that inflation “could run persistently below their 2 percent objective, with some expressing concern that such an outcome could undermine the credibility of the committee’s commitment to that objective,” according to Bloomberg. That gives rise to the possibility that the Fed could start rate hikes even at current levels of inflation, said CNBC.

The Australian dollar fell at one point to a fresh five-and-half-year low of 80.33 US cents, but rallied after the release of the US Fed minutes. “The minutes were not as good for the US dollar as the market had anticipated,” said Kathy Lien, managing director at BK Asset Management, according to The Australian. At 08:53 today (AEDT), the Aussie was trading at 80.77 US cents.

Find up to date information on the ASX at City Index.


Related tags:

Open an account today

Experience award-winning platforms with fast and secure execution.

Web Trader platform

Our sophisticated web-based platform is packed with features.
Economic Calendar