Bourse edges higher as China signals euro aid

THE stockmarket closed slightly higher yesterday, with financial sector stocks dragging the bourse across the line in a late rally.

By InvestSMART · 16 Feb 2012

By InvestSMART ·
16 Feb 2012

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THE stockmarket closed slightly higher yesterday, with financial sector stocks dragging the bourse across the line in a late rally.

The benchmark S&P/ASX200 index closed up 10.6 points, or 0.25 per cent, at 4253.4, while the broader All Ordinaries index rose 8.5 points, or 0.2 per cent, to close at 4327.4. The March share price index futures contract was 11 points higher at 4220, on volume of 32,274 contracts.

The market opened stronger, buoyed by good results from the Commonwealth Bank, the nation's largest lender, before turning negative, with softer commodity prices prompting a sell-off in mining stocks.

Stocks rallied on the back of comments from the governor of the People's Bank of China, Zhou Xiaochuan, that China was willing to be more involved in resolving Europe's crisis.

"We had some comments that China was going to continue to invest in euro zone government debt, which seemed to lift sentiment across the Asian region," a CMC Markets analyst, Tim Waterer, said. However, he said that after a "hit-and-miss" week on the ASX, investors were waiting on a European Union meeting to sign off on the next tranche of aid for debt-ridden Greece.

Financial stocks were up 0.62 per cent, with the Commonwealth Bank rising 27? to $50.23. NAB closed 3? higher at $23.05, Westpac rose 6? to $20.96 and ANZ rose 1? to $21.70. CBA said first-half cash profit grew 7 per cent due to a continued fall of impairment charges on loans. The $3.57 billion cash profit was above consensus analyst forecasts.

The miners were weaker, with materials and minerals companies down about 0.4 per cent.

BHP Billiton closed down 7? at $36.10, while Rio Tinto fell 41? to $68.87.

Fortescue Metals said it had reduced its production guidance for the March quarter due to the effects of cyclone Heidi, but reported its first-half profit had more than doubled to $801 million. The miner's stock fell 8? to $5.53.

Newcrest Mining, Australia's biggest gold miner, was up 6? at $34.46.

In other news, Westfield Group said its full-year net profit had risen 40 per cent to $1.53 billion. The shares rose 44?, or 5.3 per cent, to $8.81, and were among the best-performing stocks in the top 200.

National turnover was 1.9 billion securities worth $4.6 billion.

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Frequently Asked Questions about this Article…

How did the ASX200 and All Ordinaries close yesterday?

The benchmark S&P/ASX200 closed up 10.6 points (0.25%) at 4,253.4, while the broader All Ordinaries rose 8.5 points (0.2%) to 4,327.4. The March share price index futures contract was 11 points higher at 4,220 on volume of 32,274 contracts.

Why did Australian shares rally after comments from China’s central bank?

Stocks rallied after People's Bank of China governor Zhou Xiaochuan signaled China was willing to be more involved in resolving Europe’s crisis. Comments that China may continue to invest in euro‑zone government debt lifted sentiment across the Asian region and helped push Australian shares higher.

What drove gains in financial stocks and how did Commonwealth Bank perform?

Financials were a market driver, rising about 0.62%. Commonwealth Bank outperformed after reporting first‑half cash profit grew 7% to $3.57 billion — a result above consensus — attributing growth to a continued fall in impairment charges. CBA closed at $50.23; NAB closed at $23.05; Westpac at $20.96; ANZ at $21.70.

Why were mining stocks weaker and which miners were affected?

Softer commodity prices prompted a sell‑off in mining stocks, with materials and minerals companies down roughly 0.4%. BHP Billiton closed down to $36.10 and Rio Tinto fell to $68.87. Newcrest Mining bucked the trend and was up to $34.46.

How did Cyclone Heidi impact Fortescue Metals and its outlook?

Fortescue Metals reduced its production guidance for the March quarter because of Cyclone Heidi. Despite that, the company reported first‑half profit more than doubled to $801 million. The miner’s shares fell to $5.53 on the production downgrade.

What were Westfield Group’s results and what did that mean for investors?

Westfield Group reported a full‑year net profit rise of 40% to $1.53 billion. Its shares rose to $8.81 and were among the best‑performing stocks in the top 200, reflecting strong results that attracted investor interest.

Are investors watching European developments and why does that matter?

Yes. The article notes investors were waiting on a European Union meeting to sign off the next tranche of aid for Greece. Outcomes on European aid can influence global risk sentiment and therefore Australian market moves, particularly in financials and cyclicals.

What was market turnover yesterday and why is turnover important for everyday investors?

National turnover was 1.9 billion securities worth $4.6 billion. Turnover is a measure of market liquidity and investor activity — higher turnover generally makes it easier to buy or sell shares without large price swings, which matters for everyday investors managing entry and exit.