value buying pushes up australian stocks despite greek debt and chinese stock concerns 1667762015

Australian stock markets gave short shrift to the Greek debt crisis as well as the bloodbath on the Chinese stock exchanges, and instead moved up sharply by nearly 2 per cent as investors scooped up blue chips at bargain basement prices. The decision by the Reserve Bank of Australia to keep interest rates on hold also had only a limited impact on the markets, with investors preferring to focus on the weakness in the Australian currency and the resulting beneficial impact on exporters’ profitability.

Indices and sectors

The benchmark S&P/ASX 200 rose 106.4 points, or 1.9 per cent, and closed at 5,581.4, while the broader All Ordinaries index was up 100.7 points, or 1.8 per cent, at 5,564.

The big gaining sectors were telecommunications services (+2.33 per cent), consumer discretionary (+2.28 per cent), financials (+2.13 per cent) and industrials (+2.12 per cent). There were no losing sectors for the day.

Stocks

Stocks in the telecommunication sector reported robust gains. Telstra Corporation Ltd (ASX:TLS) was up 2.45 per cent to AU$6.27, TPG Telecom Ltd (ASX:TPM) moved up a healthy 2.59 per cent to AU$9.10, M2 Group Ltd (ASX:MTU) gained nearly 3 per cent to AU$10.88 and iiNet Limited (ASX:IIN) was unchanged at AU$9.54.

Mining stocks managed to end in the green despite bearish iron ore prices. BHP Billiton Limited (ASX:BHP) gained 0.92 per cent to AU$26.25, Rio Tinto Limited (ASX:RIO) was up 1.13 per cent to AU$51.74 and Fortescue Metals Group Limited (ASX:FMG) shot up 4.08 per cent to AU$1.78.

In energy, Woodside Petroleum Limited (ASX:WPL) gained 1.52 per cent AU$34.64, Origin Energy Ltd (ASX:ORG) was up 0.18 per cent to AU$11.34 and Oil Search Limited (ASX:OSH) was up 3.09 per cent to AU$7.00. However, Santos Ltd (ASX:STO) was down 0.52 per cent to AU$7.70.

The four major banks ended well into positive territory. Commonwealth Bank of Australia (ASX:CBA) rose sharply by 1.61 per cent to AU$87.69, Westpac Banking Corp (ASX:WBC) was up a solid 3.91 per cent to AU$33.76, Australia and New Zealand Banking Group (ASX:ANZ) gained 2.55 per cent to AU$33.03 and National Australia Bank Ltd. (ASX:NAB) shot up 2.21 per cent to AU$34.21.

Qantas Airways Limited (ASX:QAN) zoomed 7.86 per cent to AU$3.43 and was the top gainer on the S&P/ASX 200, while Virgin Australia Holdings Ltd (ASX:VAH) was up 2.27 per cent to AU$0.450

Stocks in the retail sector also showed solid gains. Myer Holdings Ltd (ASX:MYR) vaulted 6.15 per cent to AU$1.29 and was the second largest gainer on the S&P/ASX 200. Caltex Australia Limited (ASX:CTX) jumped 4.52 per cent to AU$34.01, Woolworths Limited (ASX:WOW) was up 0.96 per cent to AU$27.40 and Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, gained 2.39 per cent to AU$40.35.

Economic news, currency and market outlook

As widely expected, the Reserve Bank of Australia kept interest rates unchanged at 2 per cent, and reiterated its view that the local currency needed to depreciate further against the US dollar. The RBA said the flow of economic data would dictate its policy measures in future.

The Euro summit ended Tuesday without result as apparently Greece did not put forward fresh proposals. However, the Eurozone has allowed Greece until Thursday to present its revised proposals and has called a full EU summit for Sunday, according to the BBC.

The AU$3.2 trillion sell-off in the Chinese stock markets continued Tuesday, with shares falling for the seventh day out of the past nine sessions despite multiple measures by the government to stem the rout.

Stocks closed well above their lows on Wall Street as commodity prices appeared to stabilise and investors hoped for a solution to the Greek debt crisis. The Dow Jones Industrial Average added 93 points, or 0.5 per cent, to 17,777. The S&P 500 index gained 13 points, or 0.6 per cent, to 2,081. The Nasdaq Composite Index lifted 6 points, or 0.1 per cent, to 4,997.

The Australian dollar plunged through the 74.00 US cents level for the first time since 2009, driven by low commodities prices and concerns regarding the health of the Chinese economy. However, the local currency recovered from the lows and according to the Business Spectator, at 07:00 this morning (AEST) the Aussie was trading at 74.52 US cents, down from 74.85 US cents on Monday.

The Australian stock market is likely to open lower today given that at 06:45 am (AEST) this morning the September ASX SPI200 Index (AP) Futures was down 13 points at 5,510.