Stocks back on their upward path

THE sharemarket resumed its advance yesterday as investors took heart from better than expected economic data and a rosier outlook for the troubled eurozone.

By InvestSMART · 5 Jul 2012

By InvestSMART ·
5 Jul 2012

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THE sharemarket resumed its advance yesterday as investors took heart from better than expected economic data and a rosier outlook for the troubled eurozone.

The S&P/ASX 200 Index closed with a gain of 45 points, or 1.1 per cent, at 4172.2.

CMC Markets senior trader Tim Waterer said the market followed a positive lead from the US.

US stocks had been boosted overnight by a Commerce Department report that factory orders were up 0.7 per cent in May from April, while US car companies said sales rose last month.

European stocks and the euro rose on the prospect that central banks would act to boost economies.

"The rally today has been ignited mainly by the better US data overnight," Mr Waterer said.

"There's also better sentiment, with things looking a bit rosier in Europe."

He said improved commodity prices gold and oil made significant gains had helped boost the materials sector, which led the market higher.

In the resource sector, BHP Billiton rose 67? to $32.47 and Rio Tinto was $1.55 higher at $58.97.

Origin Energy was 42? richer at $12.75 after it was announced that a massive $23 billion gas project in Queensland, in which Origin is a joint-venture partner, would be expanded.

Queensland's Linc Energy edged up 1? to 78?. Linc has axed 60 jobs as it aims to achieve a cash profit of $15 million in 2012-13.

Among the big banks, ANZ finished 11? higher at $22.37, National Australia Bank improved 15? to $23.83 and Commonwealth rose 27? to $53.59 but Westpac eased 2? to $21.53.

Virgin Australia was steady at 37.5?. The airline carried more domestic passengers than rival Qantas over the year to May 31 a first for the industry's traditional No. 2.

Casinos operator Echo Entertainment was 3? higher at $4.33 as the jockeying for position by stakeholders continued, with James Packer's Crown Ltd seeking regulatory approval to lift its stake in Echo to 25 per cent.

At the close of Sydney trade, the spot gold price was up $US11.18 at $US1617.15.

Turnover was 1.39 billion securities worth $3.51 billion, with 679 stocks up, 229 down and 325 unchanged.

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Frequently Asked Questions about this Article…

Why did the ASX rally and what drove the S&P/ASX 200 higher?

The S&P/ASX 200 rose 45 points (about 1.1%) to 4172.2 after better-than-expected US economic data (factory orders) and a rosier outlook for Europe lifted investor sentiment, according to market commentary in the article.

How did US economic data influence Australian stocks?

US factory orders were reported up 0.7% in May from April, which helped boost US stocks overnight and in turn supported the Australian market’s rally the next day, as noted by a CMC Markets senior trader.

What role did commodity prices play in the market move?

Improved commodity prices—notably gains in gold and oil—helped lift the materials sector, which led the market higher during the session described in the article.

How did major resource stocks perform during the rally?

Resource names benefited from the commodity upswing: BHP Billiton rose to $32.47 and Rio Tinto was $1.55 higher at $58.97, according to the article’s report on the session.

Why did Origin Energy shares jump and what does the gas project expansion mean?

Origin Energy rose to $12.75 after it was announced that a massive $23 billion gas project in Queensland—in which Origin is a joint-venture partner—would be expanded, a development investors responded positively to.

What was happening with the big banks during the market rally?

Big-bank performances were mixed: ANZ closed at $22.37, National Australia Bank at $23.83 and Commonwealth Bank at $53.59 moved higher, while Westpac eased to $21.53, as reported in the article.

What takeover or shareholder activity affected casino stocks like Echo Entertainment?

Echo Entertainment climbed to $4.33 amid ongoing stakeholder jockeying; the article notes James Packer’s Crown Ltd is seeking regulatory approval to lift its stake in Echo to 25%, which influenced investor interest.

What were the market breadth and gold price details investors should note?

At the close of trade the spot gold price was up US$11.18 at US$1,617.15. Market turnover was 1.39 billion securities worth $3.51 billion, with 679 stocks up, 229 down and 325 unchanged—details that give a sense of the breadth and liquidity of the session.