Stocks keep up rally, though turnover thin

MATERIALS and bank stocks led the charge yesterday, and the sharemarket closed firmly in the black after a positive US lead from Wall Street on Friday.

By InvestSMART · 18 Oct 2011

By InvestSMART ·
18 Oct 2011

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MATERIALS and bank stocks led the charge yesterday, and the sharemarket closed firmly in the black after a positive US lead from Wall Street on Friday.

The S&P/ASX 200 Index finished with a gain of

69.8 points, or 1.66 per cent, at 4275.4.

CMC Markets chief market strategist Michael McCarthy said trading was strongly positive but on very light volumes.

Market turnover was

1.6 billion shares worth

$3.4 billion, with 683 shares finishing up, 312 closing lower and 346 ending steady.

Mr McCarthy said there was a "lack of conviction" in trading as debt woes in Europe and the US continued to weigh on sentiment.

"There are a number of reasons for local investors to be cautious: cleary while we're much less pessimistic about the debt situation in Europe and the US, we haven't seen some solutions as yet and the potential for negative news flow has risen," he said.

Mr McCarthy said materials and banks were the two best sectors, with the small end of the resource sector a standout performer.

OZ Minerals, Aurora Oil and Gas, Mount Gibson Iron and Atlas Iron were among such stocks that ended more than 5 per cent higher.

BHP Billiton put on 79?, or 2.1 per cent, to $37.65 while Rio Tinto appreciated $1.65, or 2.4 per cent, to $69.95 after saying it would sell 13 aluminium units such as refineries and smelters as it sought to streamline its Alcan aluminium business.

Among the banks, Commonwealth closed 81?, or 1.7 per cent, higher at $48.31, ANZ gained 37?, or 1.8 per cent, to $21.36, National Australia Bank added 47?, or 1.9 per cent, to $24.75 and Westpac found 38?, or 1.8 per cent, to $21.99.

Qantas inched 2? lower to $1.54. The airline Qantas has cancelled 16 domestic flights, blaming maintenance engineers for having to ground five planes as its dispute with pilots escalates.

Super Retail Group shares remained in a trading halt as it announced it had agreed to buy sports goods retailer Rebel Group for $610 million from private equity firm Archer Capital. The shares last traded at $6.50.

Gold continued its rally, finishing the Australian session up $US9.64 at $US1681 an ounce. Newcrest firmed 35? to $36.85.

The dollar hit a one-month high after finance ministers from the world's wealthiest nations vowed to stop the European debt crisis spreading.

In early morning trade, it went as high as $US1.0350, its highest since September 16. At the Australian close, it was trading at $US1.0307, up three-quarters of a US cent from Friday.

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Frequently Asked Questions about this Article…

How did the S&P/ASX 200 perform today and what drove the move?

The S&P/ASX 200 finished up 69.8 points, or 1.66%, at 4,275.4. The rally was led by materials and bank stocks, although trading occurred on relatively light volumes according to market strategists.

Which materials stocks stood out on the ASX and why?

The small end of the resource sector was a standout, with OZ Minerals, Aurora Oil & Gas, Mount Gibson Iron and Atlas Iron all finishing more than 5% higher. Major miners also rose: BHP added about 79 cents (2.1%) to $37.65 and Rio Tinto gained $1.65 (2.4%) to $69.95 after saying it would sell 13 aluminium units as it streamlines its Alcan aluminium business.

How did the major banks trade and what were their share price moves?

Bank stocks were strong: Commonwealth Bank closed about 81 cents (1.7%) higher at $48.31; ANZ rose 37 cents (1.8%) to $21.36; National Australia Bank added 47 cents (1.9%) to $24.75; and Westpac gained 38 cents (1.8%) to $21.99.

What was the market turnover and what does it tell everyday investors?

Market turnover was around 1.6 billion shares worth about $3.4 billion, with 683 stocks up, 312 down and 346 unchanged. Analysts noted the market was positive but on very light volumes, suggesting a lack of conviction among local investors.

Should investors be worried about European and US debt issues right now?

The article notes caution: strategists said debt worries in Europe and the US continue to weigh on sentiment. While they are 'much less pessimistic' about the situation, they haven’t seen clear solutions yet and warned the potential for negative news has risen—so investors may want to remain cautious.

Did any corporate or operational news affect individual stocks, like Qantas?

Yes. Qantas dipped about 2 cents to $1.54 after cancelling 16 domestic flights, saying maintenance engineers had to ground five planes amid an escalating dispute with pilots.

What’s the latest on Super Retail Group and the Rebel acquisition?

Super Retail Group shares were in a trading halt after the company agreed to buy sports goods retailer Rebel Group for $610 million from private equity firm Archer Capital. The shares last traded at $6.50 before the halt.

How did gold and the Australian dollar move, and what were the price levels?

Gold continued its rally, finishing the Australian session up US$9.64 at US$1,681 an ounce. The Australian dollar hit a one-month high after finance ministers pledged to prevent the European debt crisis from spreading, trading as high as US$1.0350 in early trade and closing at US$1.0307 (about three-quarters of a US cent up from Friday). Newcrest also firmed about 35 cents to $36.85.