Jump in private investment bolsters market

THE local market edged higher after fresh domestic economic data boosted sentiment, amid opportunistic buying in industrial stocks.

By InvestSMART · 1 Dec 2011

By InvestSMART ·
1 Dec 2011

Comments

THE local market edged higher after fresh domestic economic data boosted sentiment, amid opportunistic buying in industrial stocks.

The benchmark S&P/ASX200 index rose 17.7 points, or 0.43 per cent, to 4119.8, while the broader All Ordinaries rose 17.4 points, or 0.42 per cent, to 4184.7. Trading volumes remained thin, with turnover at 2.43 billion shares worth $6.03 billion.

CommSec analyst Tom Piotrowski said the positive private investment figures provided a modest lift to the market. Australian new capital expenditure growth surged 12.3 per cent in the September quarter, beating an expected 7 per cent rise.

The data showed most investment was concentrated in the mining sector, which was no surprise.

Among the major miners, BHP Billiton was down 6? at $34.92, Rio Tinto eased 55? to $62.95 and Fortescue slid 11? to $4.54.

BHP announced it was reviewing the sale of its Canadian diamond assets, two days after the resources giant promoted the president of the Vancouver-based division, Graham Kerr, as its chief financial officer.

Mr Piotrowski said a focus this week would be key US economic data including employment numbers on Friday. He said it was unsurprising that ratings agency Standard & Poor's had lowered its credit ratings for many of the world's largest financial institutions, including the biggest banks in the US.

Locally, Bradken, which manufactures capital equipment for the mining, energy and freight rail industries, completed a $US200 million private bond placement in the US, as it seeks to diversify funding sources and extend the maturity of its debt. The shares rose 23? to $7.33.

Ports and rail operator Asciano was up 5.5? at $1.525. Australia's big four banks opened weaker, but closed in the black, with ANZ the best, up 39?, or 2 per cent, at $19.90.

Making headlines, grocery wholesaler Metcash booked a 14 per cent drop in interim profit, but has increased its full year financial forecasts. The shares rose 6? to $4.03.

Coal miner Aquila Resources won conditional approval from the government for its first iron ore mine. The shares rose 3.5 per cent to $6.48.

The gold spot price in Sydney was $US1722.10 per ounce, up $US9.10.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What happened on the ASX today and how did the S&P/ASX 200 perform?

The local market edged higher: the S&P/ASX 200 rose 17.7 points to 4,119.8 and the All Ordinaries gained 17.4 points to 4,184.7. Trading volumes were relatively thin, with turnover of about 2.43 billion shares worth roughly $6.03 billion.

Why did private investment figures boost market sentiment?

Private capital expenditure growth surged 12.3% in the September quarter — well above the 7% analysts had expected. CommSec’s Tom Piotrowski said those stronger-than-expected private investment figures provided a modest lift to the market, especially as most of the investment was concentrated in the mining sector.

How did major miners like BHP, Rio Tinto and Fortescue trade and were there any company updates?

Major miners weakened on the day: BHP Billiton was trading around $34.92, Rio Tinto about $62.95 and Fortescue around $4.54. BHP also announced it is reviewing the sale of its Canadian diamond assets and promoted Graham Kerr, the president of its Vancouver division, to chief financial officer.

Which ASX-listed industrial and resource stocks had notable moves and why?

A few standouts: Bradken rose after completing a US$200 million private bond placement in the US to diversify funding and extend debt maturity (shares around $7.33). Ports and rail operator Asciano climbed to about $1.525. Coal miner Aquila Resources won conditional government approval for its first iron ore mine and traded near $6.48.

What happened with Metcash and what does that mean for investors watching retailers?

Grocery wholesaler Metcash reported a 14% drop in interim profit but raised its full-year financial forecasts; its shares traded higher at about $4.03. The result highlights that interim profit falls can still be accompanied by improved full-year guidance, which investors often watch closely.

How did Australia’s big banks perform and was there any credit-rating news affecting banks?

Australia’s big four banks opened weaker but finished the day in positive territory. ANZ was the best performer, up about 2% to $19.90. Separately, ratings agency Standard & Poor’s had lowered credit ratings for many of the world’s largest financial institutions, a development CommSec’s Tom Piotrowski said was not surprising.

Which macroeconomic events should investors be watching after this trading day?

Analysts flagged key US economic data as the next focus, including upcoming US employment numbers later in the week. Those US data releases can influence global risk sentiment and local market direction.

What happened to gold prices and overall market liquidity during the session?

Gold’s spot price in Sydney was about US$1,722.10 per ounce, up roughly US$9.10. Overall market liquidity was modest: turnover was around 2.43 billion shares valued at about $6.03 billion, indicating relatively thin trading conditions.