eurjpy rebounds from lows but downside pressure remains 1819122016

Retail and consumer stocks helped push Australian stocks to a positive close, despite a disappointing show from mining and energy shares. Data showed that retail sales grew solidly and well past analysts’ estimates during June.

Indices and sectors

The benchmark S&P/ASX 200 rose 18.6 points, or 0.3 per cent, and closed at 5,697.9, while the broader All Ordinaries index was up 17.6 points, or 0.3 per cent, at 5,681.9.

Gaining sectors included utilities (+1.50 per cent), healthcare (+1.14 per cent), consumer discretionary (+0.97 per cent), consumer staples (+0.93 per cent) and industrials (+0.82 per cent). The top losing sectors were energy (-1.39 per cent), materials (-0.82 per cent) and information technology (-0.58 per cent).

Stocks

Stocks in both the materials and energy sectors fell heavily Tuesday. BHP Billiton Limited (ASX:BHP) declined 1.07 per cent to AU$25.90, Rio Tinto Limited (ASX:RIO) fell 0.34 per cent to AU$52.02, Fortescue Metals Group Limited (ASX:FMG) slumped 4.57 per cent to AU$1.77 and Atlas Iron Limited (ASX:AGO) was down 2.86 per cent to AU$0.034.

Woodside Petroleum Limited (ASX:WPL) fell 0.77 per cent to AU$34.98, Origin Energy Ltd (ASX:ORG) finished 1.61 per cent lower at AU$11.01, Oil Search Limited (ASX:OSH) was down 0.83 per cent to AU$7.20 and Santos Ltd (ASX:STO) gave up 2.59 per cent to end at AU$7.15. The Brent benchmark crude oil price crashed through the US$50 level for the first time since January.

Banks had a mixed show. Commonwealth Bank of Australia (ASX:CBA) was up 0.76 per cent to AU$88.03 and Australia and New Zealand Banking Group (ASX:ANZ) gained 0.31 per cent to AU$32.78. However, Westpac Banking Corp (ASX:WBC) slipped 0.23 per cent to AU$34.77 and National Australia Bank Ltd. (ASX:NAB) was down 0.09 per cent to AU$34.56.

Retail and supermarket names did quite well, leading the overall market higher, after excellent retail data. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, shot up 1.56 per cent to AU$43.07, Woolworths Limited (ASX:WOW) was up 0.42 per cent to AU$28.72, Metcash Limited (ASX:MTS) jumped 1.73 per cent to AU$1.17 and Myer Holdings Ltd (ASX:MYR) was up 3.17 per cent to AU$1.30. Though Caltex Australia Limited (ASX:CTX) fell 0.96 per cent to AU$33.94, Harvey Norman Holdings Limited (ASX:HVN) surged 6.07 per cent to AU$4.72, and was the second largest gainer on the S&P/ASX 200.

Economic news, currency and market outlook

The Reserve Bank of Australia left interest rates unchanged at its monetary policy meeting Tuesday. "The available information suggests the economy has continued to grow," Gov. Glenn Stevens said in a statement. "Low interest rates are acting to support borrowing and spending." From the language, analysts noted that the RBA had toned down its calls for a weaker Australian dollar, considering the currency had already hit six-year lows against the greenback. The central bank simply acknowledged that the Aussie was responding to lower commodity prices.

Data from the Bureau of Statistics showed that retail sales surged 0.7 per cent during June, handily surpassing the Bloomberg survey of economists which forecast just 0.4 per cent. The data showed that Australians spent approximately AU$24.35 billion in June, and that the volume of goods sold jumped higher by 0.8 per cent even as prices remained subdued, according to the ABC.

According to The Australian Bureau of Statistics, the country’s trade deficit expanded by 10 per cent during the quarter ended June to AU$2.9 billion. The bureau also made a downward revision to April’s trade deficit to AU$4.1 billion, the largest deficit posted by Australia in 45 years, according to the ABC. Analysts attributed the worsening deficit to falling commodity prices, which trimmed export receipts, and unabated import inflows sustained by continuing demand growth.

On Wall Street Monday, stocks ended lower on comments from Federal Reserve Bank of Atlanta President Dennis Lockhart who said that the US economy was ready to absorb a hike in short-term interest rates. At the closing bell, the Dow Jones Industrial Average was down 48 points, or 0.3 per cent, to 17,551. The S&P 500 fell 0.2 per cent to 2,093, while the Nasdaq Composite fell 0.2 per cent to 5,106.

The Australian dollar briefly jumped past 74 US cents level after the RBA refrained from its usual language calling for a decline in its value, according to the Business Spectator. At 04:45 this morning (AEST) the local currency was trading at 73.80 US cents, up from 73.77 US cents on Tuesday.

The Australian stock market is likely to open lower today given that at 6.54 am (AEST) the September ASX SPI200 Index (AP) Futures was down 16 points at 5,623.