A nine week high for the Australian stockmarket yesterday as higher resources and energy shares boosted confidence and takeover activity encouraged buyers.
At the close, the ASX200 index was 29.9 points higher at 5730.3, while the All Ordinaries was up 37.3 points to 5797.7. For both it was the highest close in 9 weeks.
Traders said the better than expected jobs losses in the US helped the tone, but higher copper, oil and a rebound in gold during trading yesterday helped.
And last night oil drove over $US120 a barrel in trading in New York to peak at $US120.36, before easing a touch to end more than $US3 higher at $US119.97 a barrel.
A rise in the euro sent the US dollar lower and despite signs of better times for the US service sector, the rise in oil prices sent Wall Street lower and it closed around 0.5% lower. Gold rose, as did copper, which was affected by a rogue trading deal that saw the price spike more than 40 US cents a pound before settling back.
Yesterday, Incitec Pivot did well with a slightly better interim profit than forecast, but it lifted full year guidance for earnings as world prices firm. That didn’t stop profit taking and a late fall in the share price to $171, a loss of 50 cents.
But despite the confidence, some analysts wonder if slowing company earnings growth could be the trigger for the next bout of declines in equity markets.
JP Morgan yesterday downgraded the earnings prospects of retailers like Harvey Norman and JB Hi-Fi after the retail sales figures for March on Friday revealed some signs of a sharper than expected slowdown in demand for consumer electronics products.
BHP Billiton added 70 cents to $44.12 and rival Rio Tinto put on 69 cents to $138.95. The Rio price is still at a substantial discount to the value of the 3.4 BHP share offer of $150. That discount is almost $11 or a 7.3% discount, which is the largest closing discount so far for the offer.
Macarthur Coal, the supplier of more than a third of the world’s pulverised coal, dropped 4 cents to $17.71 after saying discussions with a third party were continuing following a takeover approach late last month.
Investors would have preferred some news of a decision or an ending of talks.
The banks were mostly stronger, with ANZ adding 39 cents to $23.25 and pushing the sector higher, aided by Westpac, up 13 cents to $25.98 and NAB 7 cents higher to $31.60.
St George Bank added 49 cents to $27.74 ahead of its first half profit report today. The Commonwealth Bank fell 75 cents to $44.20.
Bravura Solutions rose 2 cents to $1.48 after the board of the financial services software company agreed to a $246 million takeover offer from local private equity company Ironbridge Capital.
But the shares finished well below the offer price of $1.73 per share.
Incitec Pivot dropped 50 cents to $171.00 despite reporting a record first-half profit of $169.8 million on the back of strong fertiliser prices.
Retailers were mixed, with Coles owner Wesfarmers adding 28 cents to $37.48, David Jones 2 cents to $3.61, Harvey Norman 3 cents to $3.66 and Woolworths lost 8 cents to $28.87.
Harvey Norman reports its third quarter sales figures today.
The media sector was mixed, with Consolidated Media Holdings up 5 cents to $3.59, Fairfax 2 cents to $3.52, News Corp lost 25 cents to $20.66 and its non-voting shares shed 19 cents to $19.83.
The energy sector was stronger, with Woodside up $2.22 to $59.22 on the higher oil rice; Santos rising 81 cents to $18.52 and Oil Search 17 cents to $5.16. They higher oil price will send them higher today.
Anzon Australia dropped 30 cents or 20.5% to $1.16 after Nexus Energy cancelled a planned merger between the two companies, following disappointing results from a drilling program at Anzon’s Basker oil field. Nexus rose 13.5 cents to $1.64.
The gold stocks were stronger, with Newcrest adding 70 cents to $28.30, Lihir, 10 cents to $3.08 and Newmont rose 15 cents to $4.72.
