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Aussie share market up 2%

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Published on: Thursday, February 04, 2016

The Australian share market has closed around two per cent higher in the wake of a strong rise in oil prices and the hope that weak US economic data will slow the pace of interest rate hikes in the US. CMC Markets chief market analyst Ric Spooner said the local bourse was buoyed by a late rally on Wall Street on Wednesday which was led by an eight per cent jump in oil prices.

"Today is about market dynamics: risk-on and short covering," Mr Spooner said. "The catalyst for the moves was most likely the weakening in the US services PMI (purchasing managers index)." US economic data showed that the US economy's services sector had expanded at a slower-than-expected rate. Mr Spooner said that data added to the market's assessment that US economic growth was moderating a little, which in turn pushed back expectations of further increases in US interest rates.

That consequently weakened the US dollar, which started a short-covering rally in oil prices. Mr Spooner said the price of oil had been a chief concern among equity markets globally, and a lift in the oil price had not only boosted the energy sector but other sectors as well. On the local bourse, oil and gas producer Woodside Petroleum ascended $1.49, or 5.81 per cent, to $27.14, and Santos strengthened 37 cents, or 13.36 per cent, to $3.14. AGL Energy lifted 40 cents to $18.91 after it said it is quitting its gas exploration and production activities due to the collapse in oil and gas prices.

In the resources sector, global miner BHP Billiton jumped $1.18, or 8.27 per cent, to $15.45, Rio Tinto rose $3.30, or 8.91 per cent, to $40.33, and Fortescue Metals put on 19 cents, or 11.73 per cent, at $1.81. BHP Billiton spinoff South32 was 13.5 cents, or 14.21 per cent, higher at $1.085 as it said it will slash 620 jobs and has flagged widespread job losses in Australia after revising down its commodity price forecasts.

Among the major banks, National Australia Bank was up 51 cents at $26.87, ANZ lifted 63 cents to $24.30, Westpac improved $1.05 to $30.48, and Commonwealth Bank gained $1.63 at $77.36.

Macquarie Group dropped $3.40 to $64.86 after the investment group confirmed its second half profit would be lower than its first. Wagering and keno firm Tabcorp was off 13 cents at $4.39 after its first half revenue and underlying profit figures missed market estimates.

Airline operator Virgin Australia was steady at 49 cents after it booked a strong lift in profit in the second quarter. Ansell plunged $3.85, or 20.64 per cent, to $14.80 after the gloves and condom maker flagged a fall in its full-year earnings.

KEY FACTS:

* At 1623 AEDT, the benchmark S&P/ASX200 index was up 103.6 points, or 2.12 per cent, at 4,980.4 points.

* The broader All Ordinaries index was up 98.5 points, or two per cent, at 5,029.3 points.

* The March share price index futures contract was up 105 points at 4,929 points, with 41,322 contracts traded, according to preliminary calculations.

* Preliminary national turnover was 2.3 billion securities traded worth $5.8 billion.


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