Stocks climb to highest in five months

THE sharemarket jumped to its highest close in more than five months yesterday, after global markets rallied in the wake of a successful bond auction by economically troubled Spain. Investors were also buoyed by a reasonably positive production report from global miner BHP Billiton.

By InvestSMART · 19 Apr 2012

By InvestSMART ·
19 Apr 2012

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The S&P/ASX 200 Index rose 59.9 points, or 1.4 per cent, to 4348.7, its highest close since October 28.

Global sharemarkets rallied in response to the Spanish short-term bond auction, which eased concerns over the eurozone debt crisis. Spanish yields are the hot topic in the market at the moment, with daily investment flows either towards or away from riskier assets hinging on the price direction of the embattled country's bonds.

The overnight auction of short-term bonds was a curtain raiser to a crucial auction of 10-year bonds later this week, seen as a key indicator of the market's confidence in Spain.

CMC Markets chief market analyst Ric Spooner said the Australian market responded positively to the auction, but noted that short-term bonds were less risky than the long-term bonds up for sale later this week.

"But so far, so good," Mr Spooner said. "A generally

in-line and reasonable result from BHP Billiton gave us some support today as well, all against the background of a presumption of an interest rate cut by the Reserve Bank next month."

In the resource sector, BHP Billiton was 95?, or

2.9 per cent, higher at $35.10 after its latest production figures met expectations. But the miner warned that the impact of ongoing strikes at its Queensland coal mines might be substantial.

Rio Tinto jumped $1.80, or 2.8 per cent, to $66.50 and Fortescue rose 14?, or 2.4 per cent, to $5.93 ahead of its production report today.

Oil and gas producer Petsec Energy was steady at 18.5? as it booked a 62 per cent plunge in March-quarter revenue after production and US gas prices fell.

Westfield Group was up 30? at $9.17 after it said it would sell eight shopping centres in the US for $US1.15 billion so it could reduce debt and invest in developments like the new World Trade Centre.

Bank of Queensland was 18? higher at $7.14 after it said loan arrears were stabilising. A big rise in the cost of bad loans caused a $90.6 million first-half loss for BOQ.

NAB rose 33? (1.5 per cent) at $25.18, Westpac advanced 8? to $22.06, ANZ picked up 26? (1.1 per cent) at $23.26, and Commonwealth put on 68? (1.4 per cent) to $50.78. The dollar gained three-quarters of a US cent , closing at $US1.0385 from $US1.0314 on Tuesday.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 reach its highest close in more than five months?

The S&P/ASX 200 rose to its highest close since October 28 after global markets rallied following a successful short-term bond auction in Spain and a reasonably positive production report from BHP Billiton. Investors were also trading on a presumption of an interest rate cut by the Reserve Bank next month, which supported the market rally.

How did the Spanish bond auction influence Australian sharemarkets?

The successful short-term Spanish bond auction eased concerns about the eurozone debt crisis, helping lift global sharemarkets and pushing the Australian market higher. The auction was seen as a lead-in to a crucial 10-year bond sale later in the week, with markets watching longer-term yields as a key confidence indicator.

What did BHP Billiton’s production report mean for investors and its share price?

BHP Billiton’s production figures were broadly in line with expectations, which provided support to the market. The miner warned that ongoing strikes at its Queensland coal mines could have a substantial impact. BHP shares rose to $35.10 on the report.

How did other major miners like Rio Tinto and Fortescue perform, and why should investors care?

Rio Tinto jumped to $66.50 and Fortescue rose to $5.93 ahead of its production report. Strong moves in large miners can influence the broader resource sector and the ASX, so production updates and outlooks from these companies are important indicators for everyday investors watching commodity and mining exposure.

What happened with Petsec Energy and what drove its March-quarter revenue decline?

Petsec Energy was steady at 18.5 after reporting a 62 per cent plunge in March-quarter revenue. The decline was attributed to lower production and falling US gas prices, according to the company’s update in the article.

Why did Westfield Group shares rise and how does the US asset sale affect its strategy?

Westfield Group’s shares rose after it said it would sell eight US shopping centres for US$1.15 billion. The sale is intended to reduce debt and free up capital for developments, including the new World Trade Center project, which supported the stock price.

How did Australian banks trade that day and what were the key drivers for Bank of Queensland?

Major banks advanced: NAB, Westpac, ANZ and Commonwealth Bank all rose (NAB +1.5% at $25.18; Westpac to $22.06; ANZ +1.1% at $23.26; Commonwealth Bank +1.4% at $50.78). Bank of Queensland climbed to $7.14 after saying loan arrears were stabilising, despite a $90.6 million first-half loss caused by a rise in the cost of bad loans.

What happened to the Australian dollar during the market rally?

The Australian dollar gained three-quarters of a US cent, closing at US$1.0385, up from US$1.0314 the previous day, reflecting the broader positive market sentiment.