THE sharemarket lifted yesterday after BHP Billiton said it had enjoyed record levels of iron ore production in the past three months.
The news countered falls in financial stocks, which retreated in the face of World Bank warnings of a second global financial crisis.
The benchmark S&P/ASX 200 Index rose 2.3 points to 4217.9, while the broader All Ordinaries gained 2.9 points to 4280.6.
BHP Billiton, the world's largest mining company, released a report showing second-quarter iron ore production had risen a record 22 per cent, driven by mine, rail and port expansions in Western Australia.
Shareholders welcomed the news, pushing BHP shares 30? higher to $37, while rival Rio Tinto benefited from the positive sentiment, gaining 90? to $66.60.
"Resource stocks have been a talking point in Australia after BHP Billiton posted its quarterly production report," IG Markets strategist Stan Shamu said.
"The report was well received, and it largely beat estimates, with solid numbers in the three key businesses of iron ore, petroleum and base metals," he said. In the morning, the sharemarket slipped 2 per cent after investors locked in gains from the previous day, when shares had finished 68.4 points higher, up 1.65 per cent.
The falls were compounded by warnings from the World Bank that the global economy was on the verge of a second financial crisis. This pushed financial stocks lower.
ANZ suffered the largest fall, closing 26? lower on $20.79, while National Australia Bank dropped 14? to $23.66, and Westpac slipped 9? to $23.57.
But despite the falls, there was enough momentum to push the market into positive territory, with industrial, materials and energy stocks doing some heavy lifting.
Newcrest Mining rose 36? to $32.77. Energy stocks also gained, with Woodside Petroleum rising 46? to $34.11, and Orica Energy gaining 61? to $25.37.
Meanwhile, Tokyo Electric Power said it would raise electricity rates for companies and other large users, potentially increasing annual revenue by Y400 billion to cover higher fuel costs after the Fukushima nuclear crisis caused by last year's earthquake and tsunami.
The Australian dollar was steady against the greenback after earlier reaching an 11-week high on the back of stronger than expected Chinese growth data.
At 5pm, the local unit was trading at $US1.0390, compared with $US1.0389 the previous day.
Frequently Asked Questions about this Article…
What caused the ASX to lift recently and how did the S&P/ASX 200 perform?
The market lift was driven mainly by BHP Billiton reporting record iron ore production, which improved sentiment for resource stocks. The benchmark S&P/ASX 200 Index rose to 4,217.9 (a gain of 2.3 points) and the broader All Ordinaries increased to 4,280.6 (up 2.9 points).
What did BHP Billiton report about iron ore production and why does it matter for investors?
BHP said second-quarter iron ore production rose a record 22% thanks to mine, rail and port expansions in Western Australia. For everyday investors, higher production can support stronger earnings for major miners and lift sentiment across the materials sector.
How did BHP and Rio Tinto shares react to the production news?
Shareholders welcomed the report: BHP shares moved higher to about $37, and rival Rio Tinto benefited from the positive sentiment, rising to about $66.60.
Why did financial stocks fall even though the market was up?
Financial stocks retreated after warnings from the World Bank about the risk of a second global financial crisis. That risk sentiment pushed major banks lower even as resource and energy names supported overall market gains.
Which major banks were hit and what happened to their share prices?
ANZ recorded the largest fall, closing around $20.79, while National Australia Bank dropped to about $23.66 and Westpac slipped to roughly $23.57, according to the article.
Which sectors and companies helped offset bank losses on the day?
Industrial, materials and energy stocks did much of the heavy lifting. Examples in the article include Newcrest Mining (around $32.77), Woodside Petroleum (about $34.11) and Orica Energy (around $25.37), which all posted gains.
What did market strategists say about BHP’s quarterly report?
IG Markets strategist Stan Shamu said the report was well received and largely beat estimates, with solid numbers across BHP’s iron ore, petroleum and base metals businesses — a factor boosting resource stocks.
Were there any notable international developments affecting markets or companies?
Yes. Tokyo Electric Power said it would raise electricity rates for companies and large users to help cover higher fuel costs after the Fukushima crisis, potentially increasing annual revenue by ¥400 billion. Also, stronger-than-expected Chinese growth data earlier helped the Australian dollar reach an 11‑week high before settling at about US$1.0390.
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