Stocks index makes another weekly gain

INVESTORS did well this week, pushing the market to its second weekly gain on the trot after

By InvestSMART · 21 Apr 2012

By InvestSMART ·
21 Apr 2012

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INVESTORS did well this week, pushing the market to its second weekly gain on the trot after

negotiating mixed economic news.

The momentum will give traders a breather before next week's data on the crucial consumer price index, which will have a big bearing on whether the Reserve Bank cuts rates in May, as many economists expect it will.

For the week, the benchmark S&P/ASX 200 Index was up

43.2 points, or 1 per cent, at 4366.5.

The trading week was full of

economic news.

There were reports from Europe, with two rounds of Spanish bond auctions that went better than expected, thus failing to frighten

financial markets (despite a spike in bad loans). These were followed by rumours of a credit downgrade for France that stamped out any chance of a positive reaction to Spain's bond sales.

There was unsettling news from the US, with unemployment claims, manufacturing data and sales of existing home all failing to meet expectations.

China also weighed in with news, its central bank suggesting it would increase liquidity for the country's banks.

Economists were yesterday

publishing their predictions for the RBA rate meeting, along with the key variables they thought would influence the decision.

"Encouraging a cut would be the recent independent rate rises by a major bank, which has tightened policy slightly since the last board meeting," wrote HSBC Australia chief economist Paul Bloxham.

"We forecast underlying inflation to fall into the lower half of the target band year on year, giving [the RBA] scope to cut rates on May."

For the week, BHP Billiton

jumped $1.03 to $35.50 after its latest production figures met expectations, while Rio Tinto rose 68? to $66.63 after reporting increased production of key

commodities including iron ore

and coal in the March quarter.

Building materials producer Boral was down 19? at $3.70 for the week, after cutting full-year profit guidance by $22 million due to heavy rain and weak housing

activity.

Bank of Queensland firmed 13? to $7.12 after it outlined its

much-anticipated turnaround plan following a $90.6 million first-half loss.

Commonwealth Bank shares found 76? at $50.94 after boss Ian Narev set out his vision for the

country's largest bank, while still refusing to put performance targets on his key aims.

Telstra firmed 2? to $3.38 after chief executive David Thodey said the telco would look to increase its stake in Foxtel if James Packer decided to sell out of the pay TV company.

iiNet was up 12? at $3.12 after the internet service provider welcomed a High Court decision to dismiss an appeal by the world's largest film and television companies, saying the decision proved it never

supported unauthorised downloading.

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Frequently Asked Questions about this Article…

Why did the ASX 200 record a weekly gain and how big was the rise?

The benchmark S&P/ASX 200 rose for a second straight week, gaining 43.2 points (about 1%) to finish at 4,366.5. The lift came as investors absorbed mixed global economic news and positioned ahead of next week’s Australian consumer price index (CPI) release, which could influence Reserve Bank (RBA) rate decisions.

How could next week’s CPI data affect the RBA and my investments?

Economists expect the upcoming CPI print to be a key factor in whether the RBA cuts rates in May. If underlying inflation falls into the lower half of the target band, as some forecasters suggest, it would give the RBA scope to ease policy. For investors, that means CPI surprises could move interest-rate-sensitive sectors like banks, property and consumer-facing stocks.

What drove BHP Billiton and Rio Tinto shares higher this week?

BHP Billiton rose after its latest production figures met expectations, jumping $1.03 to $35.50. Rio Tinto also climbed to $66.63 after reporting increased production of key commodities including iron ore and coal in the March quarter—news investors generally reward in bulk-commodity miners.

Why did Boral shares fall and what should everyday investors note?

Building materials producer Boral slid to $3.70 for the week after cutting full-year profit guidance by $22 million. Management cited heavy rain and weak housing activity as the reasons. Investors should note that weather and housing cycles can materially affect construction-materials companies’ earnings.

What happened with Australian bank stocks like Bank of Queensland and Commonwealth Bank?

Bank of Queensland firmed to $7.12 after outlining a turnaround plan following a first-half loss of $90.6 million. Commonwealth Bank shares were at $50.94 after CEO Ian Narev outlined his strategic vision for the bank, while stopping short of setting specific performance targets for those aims. Banking stocks can react to both strategy updates and earnings outcomes.

Did any corporate moves affect Telstra or Foxtel news this week?

Telstra rose to $3.38 after CEO David Thodey said the telco would look to increase its stake in Foxtel if James Packer decided to sell out of the pay-TV company. That comment signaled potential strategic moves around media ownership that investors might watch.

What was the iiNet share reaction to the High Court decision on downloading?

iiNet shares were up to $3.12 after the internet service provider welcomed a High Court decision dismissing an appeal by major film and television companies. iiNet said the ruling proved it never supported unauthorised downloading—news that eased regulatory and legal uncertainty for the ISP.

How did international economic news from Spain, the US and China influence markets this week?

Spanish bond auctions went better than expected, which initially calmed markets, but rumours of a credit downgrade for France erased any upbeat reaction. In the US, weaker-than-expected unemployment claims, manufacturing data and existing-home sales were unsettling. China’s central bank signalled it would increase liquidity for banks. Together, these global developments contributed to the mixed backdrop that Australian investors navigated this week.