THE sharemarket closed modestly higher after strong leads from US banks helped local financials curb losses from the mining sector.
The benchmark S&P/ASX 200 gained 8.1 points, or 0.2 per cent, to 4491.5.
Financials continued to add to yesterday's climb, rising 0.5 per cent. Materials stocks were the biggest losers, down 0.5 per cent, gold fell 0.3 per cent and energy dropped 0.2 per cent.
"We had positive leads from the US, with some of the US banks reporting, those numbers looked reasonably good, particularly from the North America retail banking revenue. That gave our market, particularly the financials, a boost," said Sean Larcombe, head of risk and execution at Citigroup.
All the big banks finished higher, ANZ added 0.2 per cent to $25.79, CBA rose 0.5 per cent to $57.09, NAB jumped 1.3 per cent to $26.62 and Westpac gained 0.4 per cent to $25.72.
Rio Tinto and BHP were the main drags on the market, said Mr Larcombe, as commodity prices continued to weaken. Rio Tinto fell 1.1 per cent to $55.12, while BHP dropped 0.8 per cent to $33.07.
Fortescue Metals jumped 3.6 per cent after the iron ore miner said it remained committed to expanding its production to 155 million tonnes a year.
Ten Network continued its downward spiral, falling another 4.3 per cent to 33.5?. JPMorgan put out a cautious statement on Ten, saying: "Based on recent main channel weakness and the overall networks ratings decline, we see downside risk to Ten's 2013 financial year consensus earnings before interest, tax, depreciation and amortisation (EBITDA)".
In a report on the wider media sector, Citi said that there were no signs of growth into November-December.
Seven West Media and APN News Media were also down, 1.2 per cent and 2.6 per cent respectively, while Fairfax Media and News Ltd posted gains, up 2.6 per cent and 0.5 per cent, respectively.
Retailers impressed, buoyed by the increased likelihood of a November interest rate cut, with Credit Suisse interest rates futures pricing in a 78 per cent chance of a 25-basis-point cut next month.
"It appears to us that dwelling investment will be an important factor that the RBA will be watching over coming quarters to 'fill the void' of softer mining investment. Given the heightened conservatism among Australian households, the net of this leaves our own view on rates unchanged: a 3 per cent cash rate by the end of this year, and 2.5 per cent around mid-2013," Deutsche Bank Australia chief economist Adam Boyton said.
Frequently Asked Questions about this Article…
Why did the S&P/ASX 200 close modestly higher today?
The S&P/ASX 200 rose 8.1 points (0.2%) to 4,491.5 after positive leads from US banks. Stronger-than-expected US bank results, especially North America retail banking revenue, helped lift Australian financial stocks and offset losses in the mining sector.
How did Australia’s big banks perform on the day (ANZ, CBA, NAB, Westpac)?
All the major Australian banks finished higher: ANZ added 0.2% to $25.79, CBA rose 0.5% to $57.09, NAB jumped 1.3% to $26.62, and Westpac gained 0.4% to $25.72, with financials overall up about 0.5%.
Which miners dragged the market lower and why?
Rio Tinto and BHP were the main drags as commodity prices continued to weaken. Rio Tinto fell 1.1% to $55.12 and BHP dropped 0.8% to $33.07, contributing to a broader weakness in the materials sector (down about 0.5%).
What did Fortescue Metals announce and how did the market react?
Fortescue Metals said it remained committed to expanding production to 155 million tonnes a year. The stock jumped 3.6% on the announcement, reflecting investor interest in the miner’s growth plans.
What’s happening with Ten Network and the wider media sector?
Ten Network continued its decline, falling another 4.3% to 33.5 (as reported). JPMorgan issued a cautious note, saying there is downside risk to Ten’s 2013 consensus EBITDA. In the wider media space, Citi saw no signs of growth into November–December, while Seven West Media and APN News Media were down (1.2% and 2.6% respectively) and Fairfax Media and News Ltd posted gains (2.6% and 0.5%).
Why were retailers doing well and how do interest rate expectations play a role?
Retail stocks were supported by rising expectations of an interest rate cut in November. Credit Suisse interest rates futures priced in a 78% chance of a 25-basis-point cut next month, which can boost consumer sentiment and retail activity—helping retail stocks.
What are economists saying about future cash rates and the RBA’s focus?
Deutsche Bank Australia’s chief economist Adam Boyton said the RBA will be watching dwelling investment to offset softer mining investment. Deutsche Bank’s view in the article was for a 3% cash rate by the end of the year and around 2.5% by mid-2013.
Which sectors led gains and losses on the day and what were the moves?
Financials led the gains, rising about 0.5%. Materials were the biggest losers (down about 0.5%), while gold fell 0.3% and energy dropped 0.2%. Overall, the benchmark S&P/ASX 200 finished modestly higher (+0.2%).
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