Late-rallying finance stocks a breath of life

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

By InvestSMART · 16 Feb 2012

By InvestSMART ·
16 Feb 2012

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

The S&P/ASX 200 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.

Stocks opened stronger, buoyed by good results from Commonwealth Bank, the nation's largest lender, before turning negative as softer commodity prices prompted a selloff in mining stocks.

The market then rallied after comments from People's Bank of China governor 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," said CMC Markets analyst Tim Waterer.

However, he said that after a "hit and miss" week on the ASX, investors were waiting for a European Union meeting to sign off on the next tranche of aid for debt-ridden Greece.

They also had an eye to Australian employment figures due out today.

Financial stocks were up 0.62 per cent, with Commonwealth Bank advancing 27? to $50.23.

National Australia Bank closed 3? higher at $23.05, Westpac gained 6? to $20.96 and ANZ firmed 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 $3.576 billion cash profit result was above consensus analyst forecasts of $3.529 billion.

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

BHP closed down 7? at $36.10 while Rio Tinto slipped 41? to $68.87.

Fortescue Metals Group said it was reducing its production guidance for the March quarter due to the impact of cyclone Heidi, but reported that first-half profit had more than doubled to $801 million. The stock closed 8? down at $5.53.

The spot price of gold in Sydney finished at $US1727.45 an ounce, up $US10.20 from Monday's closing price of $US1717.25.

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

Westfield Group said full-year net profit rose 40 per cent to $1.532 billion. Its shares put on 44?, or 5.3 per cent, to $8.81, putting it among the three best-performing stocks on the S&P/ASX 200.

National turnover was 1.9 billion securities worth $4.6 billion, with 440 securities trading up, 527 down and 393 unchanged.

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Frequently Asked Questions about this Article…

How did the ASX perform at yesterday's close and what were the market breadth numbers?

The S&P/ASX 200 closed up 10.6 points at 4,253.4 and the All Ordinaries rose to 4,327.4. National turnover was 1.9 billion securities worth $4.6 billion, with 440 stocks trading up, 527 down and 393 unchanged.

Why did financial stocks rally and how did the major banks fare on the day?

Financials led the late rally, with the sector up 0.62%. Commonwealth Bank shares advanced to $50.23 after reporting first‑half cash profit grew 7% to $3.576 billion (above consensus forecasts of $3.529 billion). National Australia Bank, Westpac and ANZ also finished higher at $23.05, $20.96 and $21.70 respectively.

What triggered the market rally after an earlier selloff in miners?

Stocks opened stronger on solid results from Commonwealth Bank but turned negative when softer commodity prices hit miners. The market later rallied after People's Bank of China governor Zhou Xiaochuan said China was willing to be more involved in resolving Europe’s crisis, including continuing to invest in euro‑zone government debt — comments that lifted sentiment across the Asian region.

How did miners and the materials sector perform, and what was the impact of recent company updates?

The materials and minerals sectors were weaker, down about 0.4%. BHP closed lower at $36.10 and Rio Tinto slipped to $68.87. Fortescue Metals Group cut March‑quarter production guidance because of cyclone Heidi, although its first‑half profit more than doubled to $801 million; Fortescue shares closed at $5.53.

What happened to the gold price and how did gold miners like Newcrest perform?

The spot price of gold in Sydney finished at US$1,727.45 an ounce, up US$10.20 from the previous close. Newcrest Mining, Australia’s biggest gold miner, rose to $34.46 on the strength in the gold price.

What were the key results from Westfield Group and how did the market react?

Westfield Group reported full‑year net profit rose 40% to $1.532 billion. Its shares gained about 5.3% to $8.81, putting the stock among the three best performers on the S&P/ASX 200 that day.

Which upcoming events were investors watching that could affect market direction?

Investors were watching a European Union meeting due to sign off on the next tranche of aid for debt‑strained Greece, and they were also focused on forthcoming Australian employment figures — both seen as potential near‑term market drivers.

What are the main takeaways for everyday investors from this market update?

The market closed slightly higher on a late rally led by financials after strong bank results and positive comments from China’s central bank governor. Miners and materials were weaker on softer commodity prices and company‑specific issues such as cyclone impacts. Keep an eye on macro events (EU decisions on Greek aid and Australian jobs data) and company updates, as these drove sentiment during the session.