Stocks up but Greek talks cloud outlook

THE sharemarket closed higher yesterday after better than expected US jobs figures led to strong gains on Wall Street on Friday.

By InvestSMART · 7 Feb 2012

By InvestSMART ·
7 Feb 2012

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THE sharemarket closed higher yesterday after better than expected US jobs figures led to strong gains on Wall Street on Friday.

The S&P/ASX 200 Index jumped 44.8 points, or

1.05 per cent, to 4296.

IG Markets market strategist Stan Shamu said trading started strongly.

"But, unfortunately, we haven't been able to extend upon those gains because of the ongoing Greece issues," Mr Shamu said. "The latest reports are suggesting that the talks have actually stalled and it might extend to the equity markets tomorrow."

Greece is in talks with the European Union, the International Monetary Fund and the European Central Bank on further action needed to unlock a new euro-zone rescue deal worth ?130 billion ($A160 billion) pending since October.

The company reporting season will gain momentum on the Australian market this week, with BHP Billiton, Rio Tinto, News Corp, Telstra Corp and Newcrest Mining due to announce their results.

In the resource sector, BHP Billiton, which will release its half-year results tomorrow, put on 61? to $38.21 while Rio Tinto gained $1.80 to $72.30.

Among the banks, National Australia Bank, which will release its trading update today, advanced 42? to $24.17.

Elsewhere in the financial services sector, Perpetual was 77? higher at $21.01 after its chief executive stood down because of differences with the board over strategy.

Industrial services company Spotless found 7? to $2.50 after it gave in to shareholders' demands and said it would allow its private equity suitor to cast its eye over the business.

Telstra was 4? better off at $3.38. Telstra is expected to report a double-digit increase in net profit flowing from an increase in market share, particularly in mobile, while keeping costs in check.

Shares in Extract Resources, the Australian developer of one of the world's biggest uranium assets, firmed 3? to $8.60 after it said it was still seeking alternative options after a Chinese state-owned company inched closer to launching a takeover offer.

A slide in gold sliced 33? off Newcrest's recent gains, sending it to a close at $33.92. The spot gold price was down $US23.23 at $US1734.77 an ounce at the Australian close.

The dollar fell back from a six-month high on weak domestic retail figures and a reported stalling in the Greek debt negotiations.

At 5pm, it was at $US1.0725, up from Friday's Australian close of $US1.0688 but below the $US1.0794 at which it peaked in US trading on Friday.

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Frequently Asked Questions about this Article…

What pushed the ASX 200 higher in the latest trading session?

The Australian sharemarket closed higher after better-than-expected US jobs figures boosted Wall Street, helping lift local sentiment. The S&P/ASX 200 jumped about 44.8 points to 4,296, though gains were capped by concerns around stalled Greece debt talks.

How are the stalled Greece negotiations affecting Australian investors and markets?

Talks between Greece and the EU/IMF/ECB over a pending €130 billion rescue package reportedly stalled, which weighed on sentiment. Market strategists warned that renewed uncertainty could dampen equity gains and add volatility for everyday investors.

Which major Australian companies were due to report results and why should investors care?

The reporting season was set to gain momentum with BHP Billiton, Rio Tinto, News Corp, Telstra and Newcrest Mining scheduled to announce results. These large-cap updates can move the overall market and give investors fresh information on commodities, telecom performance and corporate profit trends.

How did resource stocks perform and what moved them?

Resource names were mixed: BHP Billiton rose to about $38.21 and Rio Tinto climbed to roughly $72.30, while Newcrest Mining fell to $33.92 after a slide in the gold price. Extract Resources also firmed following takeover interest. Commodity prices and takeover news were key drivers.

What happened in the banking and financial services sector that investors should note?

Banks and financials saw selective strength: National Australia Bank advanced to around $24.17 ahead of a trading update, and Perpetual jumped after its CEO stepped down amid strategic differences with the board. These company-specific developments influenced share moves in the sector.

Why did Telstra shares rise and what are earnings expectations?

Telstra was stronger at about $3.38, with the market expecting a double-digit increase in net profit driven by gains in market share—particularly in mobile—while the company keeps costs under control. That combination of revenue growth and cost discipline is what investors were watching.

How did movements in the gold price affect mining stocks like Newcrest?

A fall in the spot gold price (about US$23.23 lower to US$1,734.77 an ounce at the Australian close) sliced into recent gains for Newcrest, sending its share price down. Gold price swings tend to have a direct and immediate impact on gold-mining stock valuations.

What was the Australian dollar doing and what factors influenced it?

The Australian dollar eased back from a six-month high after weak domestic retail figures and reports of stalled Greek debt negotiations. At 5pm it was around US$1.0725—up from the prior Australian close but below a recent peak of about US$1.0794 seen in US trading.