the asx200 index scrapes into positive territory despite weak banks 1326102015

Australian stocks were choppy but mostly down through Thursday’s trading, save a small rally in the last hour of trade that helped the main indices just about scrape into positive territory.

Though mining stocks were propelled higher by the surge in iron ore prices, and energy stocks by a firm trend in global crude, the two sectors were neutralised by the financials, particularly the four largest banks, which were weighed under by growing uncertainty regarding an interest-rate cut by the RBA.

Indices and sectors

The benchmark S&P/ASX 200 on Thursday gained 7.3 points, or 0.1 per cent, and closed at 5,844.8, while the broader All Ordinaries index was up 7.5 points, or 0.1 per cent, at 5,820.3.

The gaining sectors on the day were materials (+1.25 per cent), energy (+1.07 per cent), information technology (+0.70 per cent) and healthcare (+0.63 per cent). The top losing sectors were consumer staples (-0.54 per cent), financials (-0.26 per cent) and consumer discretionary (-0.13 per cent).

Stocks

Mining stocks helped the S&P/ASX 200 move into positive territory yesterday. BHP Billiton Limited (ASX:BHP) moved up sharply by 2.61 per cent to AU$31.06, Rio Tinto Limited (ASX:RIO) was up 1.98 per cent to AU$56.30, Fortescue Metals Group Limited (ASX:FMG) surged a huge 9.71 per cent to AU$2.09 and BC Iron Limited (ASX:BCI) vaulted 53.85 per cent to AU$0.400. Iron ore stocks rebounded on the back of a host of factors such as BHP Billiton Limited (ASX:BHP)’s hold on further capex on its Pilbara infrastructure, Fortescue Metals Group Limited (ASX:FMG) successful bond raising worth AU$2.3 billion, and a sharp, nearly 6 per cent rise in iron ore prices. Fortescue Metals Group Limited (ASX:FMG) was the top gainer on the S&P/ASX 200 yesterday.

Energy sector stocks ended with gains across the board. Woodside Petroleum Limited (ASX:WPL) was up 0.81 per cent to AU$34.80, Origin Energy Ltd (ASX:ORG) was up 0.98 per cent to AU$12.38, Oil Search Limited (ASX:OSH) jumped 1.60 per cent to AU$8.09 and Santos Ltd (ASX:STO) was higher by 0.78 per cent to AU$7.80.

All the four major banks closed with losses. Commonwealth Bank of Australia (ASX:CBA) fell 0.44 per cent to AU$90.72, Westpac Banking Corp (ASX:WBC) dipped 0.29 per cent to AU$38.18, Australia and New Zealand Banking Group (ASX:ANZ) fell 0.65 per cent to AU$35.26 and National Australia Bank Ltd. (ASX:NAB) declined 0.71 per cent to AU$37.84.

Amongst retailers, Woolworths Limited (ASX:WOW) was down 0.57 per cent to AU$28.10, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, closed with losses of 0.75 per cent at AU$42.13 and Myer Holdings Ltd (ASX:MYR) shed 0.38 per cent to AU$1.32. However, Caltex Australia Limited (ASX:CTX) moved up 0.71 per cent to AU$35.29.

Telecom stocks were generally higher. Telstra Corporation Ltd (ASX:TLS) was up 0.16 per cent to AU$6.26, TPG Telecom Ltd (ASX:TPM) was up 1.71 per cent to AU$9.51, iiNet Limited (ASX:IIN) gained 0.58 per cent to AU$8.64 and Macquarie Telecom Group Ltd. (ASX:MAQ) closed flat at AU$5.28.

Economic news, currency and insight

National Australia Bank said yesterday that it now expected the RBA to maintain the status quo on interest rates at its May meeting but the central bank would likely cut rates in August. Citing improving economic data in recent weeks, the bank said the RBA would continue its wait and watch attitude and hold the cash rate at its record low of 2.25 per cent in its next meeting on May 5, but would signal nevertheless that it stood ready to cut rates if so required in the interest of economic growth.

According to NAB, the RBA would reduce the cash rate to a new record low of 2 per cent in August. “If the unemployment rate resumes its rise, as we expect, they will need to act on this easing bias and we have tentatively put a final 25 basis points cut to 2 per cent into August,” NAB said, according to The Australian. “Exact timing will be determined by the incoming data. It’s also possible that we continue to be pleasantly surprised by the economy which would allow the RBA to hold the cash rate at 2.25 per cent.”

The quarterly business survey by National Australia Bank Ltd. (ASX:NAB) showed that confidence fell even further below the long-term average during the first quarter of 2015. The index fell 2 points to a zero reading, despite positive factors such as cheaper oil, and RBA rate cut and a weaker Australian dollar, according to Business Spectator. "The survey continues to show a patchwork economy, with much of the strength restricted to a narrow subset of industries," the bank said.

On Wall Street, the technology loaded NASDAQ Composite closed at an all-time high on Thursday, surging past its dot.com peak, according to Reuters. Led by Apple, the NASDAQ moved up as high as 5,073.09 before settling at a record close of 5,056.06, up 20.89 points, or 0.41 per cent. "Now that it's making a new high, I don't think it's just going to stop. It has the potential to go up, absent some external event that I can't predict. I think the companies look as though they ought to power through this environment," said Walter Price, senior portfolio manager and managing director of the AllianzGI Global Technology fund in San Francisco, as quoted by Reuters. The Dow Jones Industrial Average rose 20.42 points, or 0.11 percent, to 18,058.69 and the S&P 500 gained 4.97 points, or 0.24 percent, to 2,112.93.

At 07:00 this morning (AEST), the Australian dollar was trading at 77.78 US cents, up from 77.28 US cents on Thursday, according to the Business Spectator, deriving strength from some disappointing US economic data.

The Australian stock market is likely to open higher today given that at 06:54 this morning (AEST), the June ASX SPI200 Index (AP) Futures was trading up by 27 points at 5,858.0.