bulls make a roaring comeback on friday pushing the asx up 2 33 per cent 1022612015

The Australian stock market closed Friday on a high note, reversing all the losses during the week with a powerful 2.33 per cent rally, and touching new six-and-half-year highs. The market recorded its biggest one-day gain in over two months, as a confluence of bullish factors ignited both domestic and overseas investor confidence.

Rio Tinto's (ASX:RIO) shareholder-friendly announcements on Thursday of a buyback and higher dividend were the catalyst for a 4 per cent rally in the materials sector, while rate-sensitives such as banks surged afresh on expectations of yet more rate cuts due to the recent poor employment report.

Bulls also took heart from positive global developments such as an agreement on a Ukrainian ceasefire, hope for a Greek debt deal on Monday and the beneficial impact of a weak Australian currency on the earnings of the country’s exporters.

Indices and sectors

The benchmark S&P/ASX 200 vaulted 133.9 points, or 2.3 per cent, and closed the week at 5,877.5, while the broader All Ordinaries index jumped 127.8 points, or 2.2 per cent, to 5,835.5.

There was not a single losing sector on the day. The top sectors were materials (+4.08 per cent), energy (+3.93 per cent), and industrials (+2.40 per cent). Financials gained 2.09 per cent, while defensives such as utilities (+0.75 per cent), healthcare (+0.94 per cent) and consumer staples (+1.45 per cent) were at the bottom of the heap.

Stocks

Amongst the miners, BHP Billiton Ltd (ASX:BHP) gained 4.79 per cent to AU$32.17, Rio Tinto Ltd (ASX:RIO) surged 6.49 per cent to AU$63.79 and Fortescue Metals Group Ltd (ASX:FMG) leapt 5.71 per cent to AU$2.59. Copper miner OZ Minerals Ltd (ASX:OZL) was up a solid 8.24 per cent to AU$3.81 and was one of the top gainers on the S&P/ASX 200. Gold miner Beadell Resources Ltd (ASX:BDR), the second biggest gainer on the S&P/ASX 200, shot up 10.53 per cent to AU$0.315.

Iron and steel recycler Sims Metal Management Ltd (ASX:SGM) was a top gainer on the S&P/ASX 200, rising 10.64 per cent to AU$11.75 after the company reported that its net profit after tax leapt 53 per cent to AU$64.4 million and underlying earnings per share jumped 54.7 per cent to AU$0.314 per share.

Amongst the largest banks, Commonwealth Bank of Australia (ASX:CBA) led from the front with a gain of 2.16 per cent to AU$93.15, National Australia Bank Ltd (ASX:NAB) rose 2.10 per cent to AU$37.48, Australia and New Zealand Banking Group (ASX:ANZ) was up 2.17 per cent to AU$35.74 and Westpac Banking Corp (ASX:WBC) gained 2.29 per cent to AU$37.53. Macquarie Group Ltd (ASX:MQG) gained 3.49 per cent to AU$68.13.

Amongst energy stocks, Woodside Petroleum Ltd (ASX:WPL) was up nearly 4 per cent at AU$35.19, Santos Ltd (ASX:STO) gained 4.35 per cent to AU$7.92, Oil Search Ltd (ASX:OSH) was up 3.18 per cent to AU$8.30, and Karoon Gas Australia Ltd (ASX:KAR), the third biggest gainer on the S&P/ASX 200, shot up 10.13 per cent to AU$2.50.

Domino's Pizza Enterprises Ltd (ASX:DMP) shot up 4.89 per cent to AU$34.30, Telstra Corporation Ltd (ASX:TLS) gained 2.17 per cent to AU$6.59 and Qantas Airways Ltd (ASX:QAN) was up nicely by 4.30 per cent to AU$2.67.

Economic news, currency and insight

Speaking before the Federal Government’s House Of Representatives Economic Committee, RBA Governor Glenn Stevens warned that interest rate cuts may not have the same impact on growth as in the past, according to the Herald Sun. He said households would borrow earlier and spend in the event of a reduction in interest rates, “Today, such a channel may be less effective,” he said.

He acknowledged that the bank’s quarterly monetary policy statement was assuming lower interest rates as well as a lower exchange rate than previously, as the economy made the transition out of the mining boom. He warned however that “these are assumptions rather than forecasts or commitments to a course of action.”

At 09:13 this morning (AEDT) the Australian dollar was trading at 77.74 US cents, up from 77.42 US cents on Friday benefiting from a weakening US dollar because of economic data relating to consumer sentiment.

The Australian stock market is expected to open with gains today, considering that the March ASX SPI200 Index (AP) Futures was up 29 points to 5,851.0 as at 07:59 this morning (AEDT).