the australian benchmark spasx 200 ends the week over 3 per cent in the red 1403792015

Australian stocks ended an entirely forgettable week with another losing session on Friday. The S&P/ASX 200 only flattered to deceive in the early hours of trading, rising to the day’s high of 5,689.10, before collapsing under the weight of renewed selling to end at the day’s low of 5,634.60. A downdraft of selling pressure in mining and energy stocks more than neutralised a token gain in the financial sector.

However, the appearance of some kind of stability in bank stocks, after the hammering last week, was a positive factor. “Investors are still looking for yield and the banks still have reliable earnings,” said Macquarie Equities division director Lucinda Chan, as quoted by Business Spectator. “They might not be as strong as some would like, but when you’re holding cash in a low interest rate environment, you’re not going to get a return above 2.5 per cent — people are still looking for growth assets.”

Indices and sectors

The benchmark S&P/ASX 200 on Friday fell 11.1 points, or 0.2 per cent, and closed at 5,634.6, while the broader All Ordinaries index was down 9.4 points, or 0.2 per cent, at 5,635.4.

The best gaining sectors were real estate investment trusts (+1.30 per cent), utilities (+0.85 per cent), industrials (+0.64 per cent) and telecommunication services (+0.41 per cent). The top losing sectors on the day were energy (-3.24 per cent), materials (-0.83 per cent) and consumer staples (-0.34 per cent).

Stocks

Energy stocks were the loss leaders on Friday following a correction in global crude prices. Woodside Petroleum Limited (ASX:WPL) slumped 3.59 per cent to AU$33.80, Origin Energy Ltd (ASX:ORG) fell 3.34 per cent to AU$12.43 and Oil Search Limited (ASX:OSH) was down 3.32 per cent to AU$7.57. Santos Ltd (ASX:STO) crumpled 4.87 per cent to AU$8.59 and was one of the top losers on the S&P/ASX 200 on Friday.

Mining stocks were under pressure through the day. BHP Billiton Limited (ASX:BHP) fell 1.85 per cent to AU$31.30, Rio Tinto Limited (ASX:RIO) was down 0.19 per cent to AU$58.43 and Fortescue Metals Group Limited (ASX:FMG) lost AU$3.10 to AU$2.50. However, BC Iron Limited (ASX:BCI) shed 7.29 per cent and Mount Gibson Iron Limited (ASX:MGX) dumped 4.44 per cent to AU$0.215.

Banks had a mixed performance. Commonwealth Bank of Australia (ASX:CBA) fell 0.57 per cent to AU$82.64, Westpac Banking Corp (ASX:WBC) gained 0.42 per cent to AU$34.05 and Australia and New Zealand Banking Group (ASX:ANZ) was up 0.62 per cent to AU$32.35. Shares in National Australia Bank Ltd. (ASX:NAB) are currently halted.

Macquarie Group Ltd (ASX:MQG), however, was a standout winner among banks and closed higher by 3.50 per cent at AU$79.18, after it declared a full-year profit of a shade over AU$1.6 billion, up 27 per cent over the prior year period. "Today's result reflects the return on many years of investment across the business, enabling the group to further capitalize on improved trading conditions," said Macquarie chief executive Nicholas Moore, as quoted by ABC. Macquarie figured amongst the top gainers on the S&P/ASX 200 Friday.

In telecommunications, which gained 0.41 per cent as a sector, Telstra Corporation Ltd (ASX:TLS) rose 0.33 per cent to AU$6.17, TPG Telecom Ltd (ASX:TPM) gained 0.78 per cent at AU$9.06, M2 Group Ltd (ASX:MTU) was up 2.27 per cent to AU$10.79 and iiNet Limited (ASX:IIN) moved up 0.40 per cent to AU$9.94.

Retailers ended mostly with losses. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, fell 0.14 per cent to AU$43.74, Woolworths Limited (ASX:WOW) was down 0.69 per cent to AU$27.38, Caltex Australia Limited (ASX:CTX) shed 2.68 per cent to AU$33.09 and Myer Holdings Ltd (ASX:MYR) was flat at AU$1.36.

In airlines, Qantas Airways Limited (ASX:QAN), the top gainer on the S&P/ASX 200 on Friday, shot up 5.59 per cent to AU$3.40, while rival Virgin Australia Holdings Ltd (ASX:VAH) gained 1.01 per cent to AU$0.500.

Economic news, currency and insight

In its statement on monetary policy for May, the Reserve Bank of Australia revised downwards its forecasts of economic growth over the ensuing 2015-16 fiscal year by half a percent to a range of 2-3 per cent, citing a delay in the recovery of non-mining business investment, according to The Australian Financial Review. The statement also reiterated its opinion expressed last Tuesday, the date of an interest rate cut, that further weakness in the Australian dollar appears to be both “likely and necessary,” considering the slump in commodity prices. The statement was conspicuous, however, for not including an easing bias, though analysts were of the view that the trimmed projections of growth and inflation were strong enough indicators that further rate cuts were very much on the table.

On Sunday, the People’s Bank of China cut interest rates for the third time in six months in a move to boost slowing economic growth and counter a slump in its property market as well as a huge debt overhang, according to Bloomberg. The Chinese central bank reduced the one-year lending rate by 0.25 percentage point to 5.1 percent, and cut the one-year deposit rate by the same amount to 2.25 percent, effective Monday.

On Wall Street, stocks ended solidly in the green on Friday boosted by jobs data that indicated US economic growth was on track, but not enough to increase the chances of an early rate cut by the Fed, according to Reuters. Non-farm payrolls in April increased by 223,000, missing analysts’ forecasts by a small margin, while the unemployment rate dropped despite more people entering the job market. “The market loved the jobs report. Couldn't have been better,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago, as quoted by Reuters. “It wasn't a strong enough number to prompt any concern by the Fed.” The Dow Jones Industrial Average rose 267.05 points, or 1.49 percent, to end at 18,191.11. The S&P 500 gained 28.10 points, or 1.35 percent, to 2,116.10 and the Nasdaq Composite added 58 points, or 1.17 percent, to 5,003.55.

The Australian dollar has turned higher in response to the US non-farm payroll data, choosing to focus on weak wages growth and overall data that was broadly in line with expectations, according to Business Spectator. At 07:00 this morning (AEST), the Australian dollar was trading at 79.29 US cents, up from 79.11 US cents on Friday.

The Australian stock market is likely to open higher today given that the June ASX SPI200 Index (AP) Futures was up by 43 points at 5,645.