Woodside drives leap within energy sector
The benchmark S&P/ASX 200 recorded its highest close for the month, after adding 49.6 points, or 1 per cent, to finish at 5016.2, while the broader All Ordinaries rose 47.2 points, or 1 per cent, to 5002.6.
The leap in the energy sector was largely driven by Woodside Petroleum, which declared a special dividend of US63¢ a share following its decision earlier this month to shelve its $40 billion Browse LNG venture.
It is forecasting a reduction in debt, given a decision to shelve the project, and will return excess cash to investors. Woodside shares jumped 9.7 per cent to $37.96.
Division director at Macquarie Private Wealth, Martin Lakos, said the market was beginning to refocus on yields. "If you look across the banks, telecommunications, all of those yield plays have been re-visited to some extent."
Among the banks, ANZ rose 2.4 per cent to $29.25, NAB added 1.4 per cent to $32.07, Westpac lifted 1.2 per cent to $31.71 and CBA gained 1 per cent to $70.01.
Mr Lakos said a lower than expected reading on China's HSBC flash PMI, a gauge of the country's manufacturing sector, hit miners, which were already trading lower. The reading came in at 50.5; economists had expected 51.5, but a result above 50 indicates growth.
Rio Tinto fell 2.1 per cent to $53.96 while rival BHP slipped 1.1 per cent to $31.36.
Asian-Pacific markets slumped after the PMI reading, with Chinese markets recording heavy losses, and the CSI300 index was down as much as 3.3 per cent.
The dollar dipped on the release of the data, hitting US102.21¢.
Deutsche Bank currency strategist John Horner said that after poor data out of China last week, particularly GDP, the dollar had priced some weakness in before the announcement.
In late trading the dollar recovered to around US102.30¢, after comments from the Reserve Bank's head of financial stability, Luci Ellis, suggested lower interest rates were beginning to work and house prices were starting to rise.
On the local equities market, Virgin shares pushed up 4.6 per cent to 45.5¢ after the Australian Competition and Consumer Commission approved the airline's bid for a 60 per cent stake in Tiger Australia.
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The sharemarket closed higher largely because of a strong surge in the energy sector led by Woodside Petroleum and broader gains among high-yielding stocks. The S&P/ASX 200 rose 49.6 points (1%) to finish at 5016.2 — its highest close for the month — while the All Ordinaries gained 47.2 points (1%) to 5002.6.
Woodside declared a special dividend of US63¢ a share after deciding to shelve its $40 billion Browse LNG venture. The company said it expects reduced debt from shelving the project and plans to return excess cash to investors. Following the announcement, Woodside shares jumped 9.7% to $37.96.
Analysts say the market has begun refocusing on yield plays, which supported bank stocks. On the day covered, ANZ rose 2.4% to $29.25, NAB added 1.4% to $32.07, Westpac lifted 1.2% to $31.71 and CBA gained 1% to $70.01.
China's HSBC flash PMI came in at 50.5, below economists' expected 51.5. Although a reading above 50 still signals growth, the lower-than-expected result hit miners, which were already trading lower. Rio Tinto fell 2.1% to $53.96 and BHP slipped 1.1% to $31.36. Asian-Pacific markets slumped, Chinese markets recorded heavy losses and the CSI300 index was down as much as 3.3%.
The Australian dollar dipped on the weaker China data, hitting about US102.21¢. It later recovered to around US102.30¢ after comments from the Reserve Bank's head of financial stability, Luci Ellis, suggesting lower interest rates were beginning to work and house prices were starting to rise.
Martin Lakos, a division director at Macquarie Private Wealth, said the market was beginning to refocus on yields. He noted that sectors known for yield — including banks and telecommunications — have been revisited by investors to some extent.
The leap in the energy sector was largely driven by Woodside Petroleum's decision to shelve the $40 billion Browse LNG project and its subsequent special dividend and plan to return excess cash. Those moves prompted a big positive response in the stock and lifted the sector overall.
Virgin shares rose 4.6% to 45.5¢ after the Australian Competition and Consumer Commission (ACCC) approved the airline's bid for a 60% stake in Tiger Australia, a development that investors viewed positively.
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