All sectors are go as confidence returns

THE sharemarket closed sharply higher, buoyed by a return to confidence from overseas investors and solid earnings results.

By InvestSMART · 24 Aug 2011

By InvestSMART ·
24 Aug 2011

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THE sharemarket closed sharply higher, buoyed by a return to confidence from overseas investors and solid earnings results.

The benchmark S&P/ASX 200 Index was up 91.1 points, or 2.23 per cent, at 4173.4, while the broader All Ordinaries index was 89.1 points, 2.15 per cent, higher at 4239.9.

RBS Morgans director of equities Bill Chatterton said confidence was creeping into the market from investors in Asia and from a positive reporting season that had generally met expectations.

The best-performing stock was Caltex Australia, which rose 42?, or 4.3 per cent, to $10.26 after it almost doubled its first-half profit to $270 million.

"It's just a vindication that the quality businesses in the market are doing what they said they'd do," Mr Chatterton said.

"They haven't all delivered but a lot of them have delivered on expectation. With that, the market and the fund managers are a little more comfortable to spend."

Brewer Foster's Group was 9? higher at $4.99 after saying a pick-up in consumer confidence and a return to normal weather should return the sector to flat to moderate growth, even though it reported a full-year loss of $89 million.

Origin Energy closed 68? higher at $14.16 after its full-year profit fell by 70 per cent.

It said underlying profit was expected to lift by 30 per cent in the current year.

Sonic Healthcare dropped 23?, or 2 per cent, to $11.29 after the company forecast 15 per cent earnings growth after a flat full-year profit in 2010-11.

The big four banks all moved ahead, Commonwealth rising $1.11, or 2.4 per cent, to $47.01, ANZ 52? to $19.82, Westpac 70? to $20.06 and National Australia Bank 70? to $22.91.

Oil Search was up 4? at $6.04 after more than doubling first-half net profit due to higher oil prices.

Woodside Petroleum was up 59? at $35.12 and Santos was up 51? at $11.75.

Global miner BHP Billiton was up 68? at $38.21 and Rio Tinto $1.52 higher at $70.10.

As gold held on to recent strong gains, goldminer Newcrest picked up 35?, or 0.9 per cent, to $40.55. At the Sydney close, spot gold was up $US2.41 to $US1894.86 an ounce.

National turnover was 2.33 billion shares worth $6.34 billion, with 673 stocks up, 353 down, and 341 steady.

The Australian market's gains followed a mild rally on US markets overnight, which also improved sentiment in Asia.

Last night in Europe, indices on leading exchanges were up 1.5 per cent or more after the first 2? hours of trading.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 and All Ordinaries finish sharply higher today?

The market rose after a return of confidence from overseas investors and a generally positive reporting season. The S&P/ASX 200 gained 91.1 points (2.23%) to 4,173.4 and the All Ordinaries rose 89.1 points (2.15%) to 4,239.9, helped by stronger US and Asian sentiment and solid corporate earnings that largely met expectations.

How did Caltex Australia’s earnings affect its share price?

Caltex Australia jumped after reporting a near doubling of first-half profit to $270 million. The stock rose 4.3% to $10.26 as investors rewarded the stronger-than-expected profit result.

What did Foster’s Group report and how did investors react?

Foster’s (Brewer Foster’s Group) said a pick-up in consumer confidence and a return to normal weather should return the sector to flat to moderate growth, despite reporting a full-year loss of $89 million. The market reacted positively, pushing the stock up to $4.99.

What’s the story with Origin Energy’s profit and guidance?

Origin Energy’s full-year profit fell by 70%, but the company said underlying profit is expected to lift by about 30% in the current year. The stock closed higher at $14.16 as investors responded to the forward guidance.

Why did Sonic Healthcare’s shares fall despite forecasting earnings growth?

Sonic Healthcare fell to $11.29 after reporting a flat full-year profit for 2010–11, even though it forecast roughly 15% earnings growth going forward. The market reacted to the recent flat result while weighing the company’s growth outlook.

How did the big four Australian banks perform in today’s rally?

All four major banks moved ahead during the rally. At the close Commonwealth was trading at $47.01, ANZ at $19.82, Westpac at $20.06 and National Australia Bank at $22.91, reflecting broad strength in the financial sector.

What drove gains in energy, resources and gold stocks today?

Higher commodity prices and stronger production results drove gains: Oil Search rose to $6.04 after more than doubling first‑half net profit thanks to higher oil prices, Woodside was at $35.12, Santos at $11.75, BHP Billiton closed at $38.21 and Rio Tinto at $70.10. Gold miner Newcrest rose to $40.55 as spot gold held strong at US$1,894.86 an ounce.

What was the market breadth and turnover – what does that mean for everyday investors?

National turnover was 2.33 billion shares worth $6.34 billion, with 673 stocks up, 353 down and 341 steady. For everyday investors, that means the rally was broad-based across sectors, not just driven by a few stocks, which can signal more sustainable market confidence.