Greece deal just the recipe for bounce

THE sharemarket finished firmer after vaccine maker CSL injected some confidence into things and European Union finance ministers reached a Greek debt bailout deal.

By InvestSMART · 28 Nov 2012

By InvestSMART ·
28 Nov 2012

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THE sharemarket finished firmer after vaccine maker CSL injected some confidence into things and European Union finance ministers reached a Greek debt bailout deal.

The benchmark S&P/ASX 200 Index closed 32.6 points, or 0.74 per cent, higher at 4456.8, while the broader All Ordinaries gained 29.9 points, or 0.67 per cent, to 4473.4.

The market's positive run continued after eurozone finance ministers and the International Monetary Fund agreed to release ?43.7 billion ($A54.2 billion) in loans to Greece.

Bell Direct equities analyst Julia Lee said the news helped buoy the local market. "It's been a positive," she said.

Elsewhere in the region the Shanghai Composite Index fell below the 2000-point mark for the first time since 2009.

"That takes the Chinese market to levels not seen since the global financial crisis," Ms Lee said, adding that the underperformance stirred concerns about a slowdown in economic growth in China, one of Australia's key trading partners.

But investors instead took their positive cues from CSL, which upgraded its profit guidance. The shares rose to an all-time high of $50.55 in intraday trading and closed at $50.01.

This was after CSL had forecast that profit after tax would grow by 20 per cent this financial year, up from the 12 per cent forecast made in August.

CSL's strong rise added six points to the market.

Healthcare stocks also vastly outperformed other sectors, rising 4 per cent.

Retail shares were under pressure even though Harvey Norman chairman Gerry Harvey said he expected Christmas sales to be stronger.

Following its annual meeting, Harvey Norman shares shed 1.5? to touch $1.83 but Ms Bell said investors were squaring profits after a strong week for retail stocks.

Among the big banks, Commonwealth Bank added 7? to $59.22, ANZ gained 24? to $23.81, National Australia Bank advanced 13? to $23.83 and Westpac put on 13? to $24.89.

In the resource sector, global miner BHP Billiton was 19? richer at $34.20 and Rio Tinto found 57? to $57.78.

The positive news out of Greece also gave the dollar a lift. Late on Tuesday it was trading at US104.80?, up from US104.53? on Monday.

The spot price of gold in Sydney was $US1750.04 an ounce, down US11? from Monday's close.

National turnover was 1.441 billion securities worth $3.712 billion.

On Wall Street on Monday, the Dow Jones shed 42.31 points, or 0.33 per cent, to 12,967.37.

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Frequently Asked Questions about this Article…

What pushed the ASX 200 higher in the latest trading session?

The ASX 200 rose after positive news from vaccine maker CSL and a Greek debt bailout deal. The benchmark S&P/ASX 200 closed 32.6 points (0.74%) higher at 4,456.8, while the All Ordinaries gained 29.9 points (0.67%) to 4,473.4. Bell Direct equities analyst Julia Lee said the Greece deal helped buoy the local market.

How did CSL's profit upgrade affect its share price and the healthcare sector?

CSL upgraded its profit-after-tax growth forecast to 20% for the financial year (up from a 12% forecast in August). Its shares hit an intraday all-time high of $50.55 and closed at $50.01. CSL’s strong rise contributed six points to the market, and healthcare stocks outperformed, rising about 4%.

What was included in the Greece bailout deal and why did it matter to Australian investors?

Eurozone finance ministers and the IMF agreed to release €43.7 billion (A$54.2 billion) in loans to Greece. The agreement reassured investors and helped lift sentiment in Australia’s market, according to analysts quoted in the article.

Should Australian investors be concerned about the fall in the Shanghai Composite?

The Shanghai Composite fell below the 2,000-point mark for the first time since 2009, a drop described as taking the Chinese market to levels not seen since the global financial crisis. Julia Lee said this underperformance stirs concerns about a slowdown in economic growth in China, which is one of Australia’s key trading partners — something investors should monitor.

How did Australia’s big banks perform during the session?

Major banks finished higher on the day: Commonwealth Bank closed at $59.22, ANZ at $23.81, National Australia Bank at $23.83 and Westpac at $24.89, reflecting broad strength in the financial sector during the session.

What happened to resource giants BHP Billiton and Rio Tinto?

Resource stocks rose: global miner BHP Billiton was trading around $34.20 and Rio Tinto around $57.78, with both companies contributing to the positive performance in the resource sector.

Why were retail shares under pressure despite optimism from Harvey Norman's chairman?

Harvey Norman chairman Gerry Harvey said he expected stronger Christmas sales, but Harvey Norman shares fell to about $1.83 after its annual meeting. Analysts said investors were squaring profits after a strong week for retail stocks, which put pressure on the sector despite upbeat comments.

What other market indicators should everyday investors note from the report?

Other useful indicators from the session: the Australian dollar lifted to about US104.80 cents (up from US104.53 cents), the spot gold price in Sydney was about US$1,750.04 an ounce (down ~US$11), national turnover was 1.441 billion securities worth A$3.712 billion, and the Dow Jones in New York fell 42.31 points to 12,967.37 on Monday.