the australian share market gains 0 5 per cent on positive news out of greece 1060722015

Banks help the ASX 200 index to reclaim the 5,900 level

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By :  ,  Financial Analyst

Australian stocks had a good day on Monday along with other markets across the globe following the relief over the extension of the bailout for Greece by another four months. The benchmark S&P/ASX 200 reclaimed lost territory to again end above the 5,900 level.

Barring an initial dip in the opening hour of trade, the local share market quickly came into its own and rose to its best levels by the afternoon. Thereafter, stocks traded mostly sideways, but closed with all the gains of the day intact, banks being the prime architect of the market’s bullish performance.

According to Tracy McNaughton, UBS Global Asset Management Australia Head of Investment Strategy, investors were worried about the impact of the economic slowdown on share prices, and therefore were not bidding up stocks despite good earnings. "Relative to other markets overseas Australian equities still represent pretty good value at the moment, but the challenge is the macroeconomic backdrop looks quite weak," she said, as quoted by The Sydney Morning Herald. "Australia is in an income recession, which is bad for consumer and business confidence. Meanwhile, the mining boom continues to wind down, with nothing to replace it. On the policy front fiscal settings are muddled and not aligned with monetary policy." 

Indices and sectors

The benchmark S&P/ASX 200 gained 26.5 points, or 0.4 per cent, and closed at 5,908, while the broader All Ordinaries index was up 26.8 points, or 0.5 per cent, to 5,872.4.

The top gaining sectors were real estate investment trusts (+1.19 per cent), consumer discretionary (+0.90 per cent), financials (+0.64 per cent) and healthcare (+0.64 per cent). The sole losing sector for the day was materials (-0.27 per cent).


Banks were in the limelight and all the four major Australian banks chalked up gains during the day. Commonwealth Bank of Australia (ASX:CBA) rose 0.22 per cent to AU$90.41, Westpac Banking Corp (ASX:WBC) was up 0.24 per cent to AU$37.72, Australia and New Zealand Banking Group (ASX:ANZ) shot up 0.66 per cent to AU$35.04 and National Australia Bank Ltd (ASX:NAB) closed higher by 0.51 per cent to AU$37.67.

Amongst the miners, BHP Billiton Ltd (ASX:BHP) lost 0.5 per cent AU$32.12, Rio Tinto Ltd (ASX:RIO) gained 0.27 per cent to AU$3.92 while Fortescue Metals Group Ltd (ASX:FMG) shed 1.22 per cent to AU$2.42. In junior iron ore, Atlas Iron Ltd (ASX:AGO) jumped 2.50 per cent to AU$0.205, Mount Gibson Iron Ltd (ASX:MGX) was up 2.08 per cent to AU$0.245 and BC Iron Ltd (ASX:BCI) was flat at AU$0.530. Rare earth miner Lynas Corporation Ltd (ASX:LYC) jumped a huge 22 per cent to AU$0.0610, and was the top gainer on the S&P/ASX 200.

Energy stocks fared mixed. Woodside Petroleum Ltd (ASX:WPL) was higher by 1.23 per cent to AU$36.16, Origin Energy Ltd (ASX:ORG) fell 0.65 per cent to AU$12.30, Oil Search Ltd (ASX:OSH) fell 0.60 per cent to AU$8.28 and Santos Ltd (ASX:STO) moved up 1.74 per cent to AU$8.17.

Caltex Australia Ltd (ASX:CTX) fell 0.16 per cent despite having tripled its dividend. Woolworths Ltd (ASX:WOW) gained 0.18 per cent to AU$33.32 while Wesfarmers Ltd (ASX:WES) jumped 0.69 per cent to AU$46.71. Pet care company Greencross Ltd (ASX:GXL) was the second highest gainer on the S&P/ASX 200, surging 8.5 per cent to AU$9.18 after reporting record earnings for the first half due to strong demand for its pet care products. Engineering company UGL Ltd (ASX:UGL) was amongst the top losers list on the S&P/ASX 200, falling 5.6 per cent to AU$1.85 after reporting a first half loss.

Economic news, currency and insight

According to The Sydney Morning Herald, Labor Senator Sam Dastyari, who is Chairman of the Senate Economics References Committee, said the committee would be writing to NAB to ask its senior management, including Chief Executive Andrew Thorburn, to appear next week and face questions at a Senate enquiry regarding the misconduct revealed over the weekend in the bank’s financial planning division.

"Those responsible for this scandal at the NAB will be called to come before the senate inquiry and explain themselves," he said, confirming that NAB had agreed to participate. "The NAB have had a slogan of more give and less take – well we want to see them give a little more transparency around these issues."

"There are too many unanswered questions from NAB and the Senate inquiry will be an opportunity for them to come clean and put their case out there," Senator Dastyari added.

Though the local share market factored in the glad tidings on a possible solution to the Greek debt imbroglio, Greece has already missed its first deadline of Monday for sending a list of its economic reform proposals to the eurozone. According to Reuters, Greece will now send its proposals on Tuesday for consideration by eurozone finance ministers in the afternoon.

Overnight, on Wall Street, the Dow Jones and S&P 500 gave up their recent all-time highs and closed lower due to falling oil prices which were a drag on energy stocks. The NASDAQ, however, chalked up its ninth successive daily gain, boosted chiefly by Apple (NASDAQ:AAPL) which jumped 2.71 per cent to US$133.00.

The local stock market is likely to open higher considering the March ASX SPI200 Index (AP) Futures was trading up by 15 points to 5,877.0 at 07:59 this morning (AEDT).

The Australian dollar was pressured by falling commodity prices and strength in the US dollar, according to Business Spectator. The local currency was trading at 78.03 US cents at 09:03 this morning (AEDT), down from 78.36 US cents on Monday.

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