Greece puts skids on telco-led advance

THE sharemarket closed slightly higher yesterday, driven by gains in the telecommunications and financial sectors.

By InvestSMART · 15 May 2012

By InvestSMART ·
15 May 2012

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THE sharemarket closed slightly higher yesterday, driven by gains in the telecommunications and financial sectors.

But gains remained limited as concerns over Europe's debt woes and political uncertainty weighed on investors.

The benchmark S&P/ASX 200 Index gained 11.9 points, or 0.3 per cent, to 4297.

The rise was driven by monetary easing in China but had been held back by losses in the resource sector, IG Markets strategist Stan Shamu said.

China's central bank reduced its reserve-required ratio freeing up cash to lend to stimulate the economy following disappointing import and export data last week.

"There was a lift in risk assets early on, particularly in the resource space, but unfortunately through the day the uncertainty coming from Greece weighed on most of the risk assets," Mr Shamu said.

New elections may have to be called in Greece, a prospect dreaded by the European Union as it could mean further delays to the country's promised structural reforms.

High-dividend-paying bank and telco stocks performed well.

Commonwealth was the best performer among the big banks, up $1, or 1.9 per cent, at $52.40.

ANZ was 16? higher at $22.20 and National Australia Bank was 25? higher at $24.80.

Westpac was 65? lower at $22.07 after it went ex-dividend.

The big miners were mixed but the sector finished lower. BHP Billiton was firmer for most of the day but edged off highs after an executive said he could not rule out a write-down of shale gas assets.

BHP gained 9?, or 0.3 per cent, to $34.46. Rio Tinto was 7? weaker at $61 and Fortescue Metals was down 5? at $5.34.

Telstra extended its recent rally, posting a 4?, or 1.1 per cent, gain to close at $3.64.

Also supporting local exporters was a dip in the dollar to multi-month lows below parity, helping exporters such as blood products maker CSL to gain 1 per cent.

Arafura Resources jumped 1.8 per cent after the rare-earths producer confirmed it was talking with a range of potential investors for its Nolans project.

Fertiliser and explosives maker Incitec Pivot climbed 0.3 per cent, despite a 20 per cent fall in underlying earnings.

Earnings from the company's explosives unit surprised the market, vindicating expansion and lifting investor mood.

National turnover was 1.5 billion securities worth $4.1 billion, with 401 stocks up, 551 down and 426 unchanged.

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Frequently Asked Questions about this Article…

What moved the S&P/ASX 200 yesterday and how big was the gain?

The S&P/ASX 200 closed slightly higher, gaining 11.9 points to finish at 4,297. The rise was supported by strength in telecommunications and financial stocks but was limited by losses in the resource sector and uncertainty from Greece.

How did Greece’s political uncertainty affect Australian stocks?

Concerns about Greece and the possibility of new elections weighed on risk assets, tempering gains across the market. According to IG Markets strategist Stan Shamu, uncertainty from Greece pulled back some of the early lift in riskier sectors.

What impact did China’s monetary easing have on the Australian market?

China’s central bank reduced the reserve-required ratio, freeing up cash to lend to stimulate the economy. That easing gave an early lift to risk assets and helped drive buying interest in parts of the Australian market, particularly resources.

Which bank and telco stocks performed well and why should investors pay attention?

High-dividend bank and telco stocks led gains. Commonwealth Bank was the standout among big banks, rising $1 to close at $52.40. Telstra extended its rally, gaining about 1.1% to close at $3.64. Investors often watch these names for dividend income and defensive yield exposure.

Why did Westpac fall and what does 'ex-dividend' mean for investors?

Westpac fell after it went ex-dividend, which means the stock began trading without the right to the most recently declared dividend. Shares typically drop by roughly the dividend amount on the ex-dividend date, which can explain short-term price weakness.

How did major miners and resources perform and what news affected BHP?

The big miners were mixed and the overall resources sector finished lower. BHP Billiton traded firmer for most of the day but retreated after an executive said he could not rule out a write-down of shale gas assets. Rio Tinto and Fortescue Metals ended the day weaker by their respective prices reported.

Which smaller resource stocks stood out and why?

Arafura Resources jumped about 1.8% after confirming it was talking with a range of potential investors for its Nolans rare-earths project. Smaller resource companies can react strongly to project funding news or investor interest.

What corporate earnings surprises were reported and which exporters benefited from currency moves?

Incitec Pivot climbed despite a 20% fall in underlying earnings because its explosives unit delivered a better-than-expected result, supporting the stock. Exporters benefited from a dip in the Australian dollar to multi-month lows below parity; for example, blood products maker CSL gained about 1% on the currency tailwind.