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Banks offer a glimmer of hope in ‘terrible’ week for Australian shares

These are the percentage move of the ten sectors that make up the ASX\200.The market finished 0.42 per cent higher for the week, staging a spirited mid-week comeback after a disastrous 2 per cent drop on Monday and a further 0.60 per cent fall on Friday.
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Once again, energy stocks were the worst performers, with the sector dropping 5.36 per cent for the week as investors absorbed the reality of oil at $US65 ($77.35) and further falls probably to come.

The broader All Ordinaries Index closed 0.60 per cent lower on Friday but closed up 0.29 per cent for the week to 5313.60. The ASX200 closed 0.62 per cent lower on Friday, finishing the week 0.45 per cent higher at 5336.70.

“The main story is the terrible week for energy stocks and mining stocks in general,” said BBY senior private client adviser Henry Jennings. After the “horror” day of Monday, the market came back “quite dramatically”, he said. “It’s mainly on the back of the resurgence in the banks and a hope that the Murray report on Sunday is somewhat more benign that what people were expecting a month or so ago.”

Wednesday’s dreadful GDP figure – which showed the economy expanded only 0.3 per cent in the September quarter – might have helped financial stocks, said Mr Jennings.

“There’s the assumption that because the economy’s so bad we’re going to get some sort of rate cut next year,” he said. As well, “the market is quite skittish, it’s a little bit nervous. When you get nerves people go to quality, which is the banking sector. It continues to really hold the market up.”

Among the banks, National Australia Bank closed 0.61 per cent lower for the week to $32.40, Westpac rose 1.41 per cent to $33.01, Commonwealth Bank lifted 1.14 per cent to $81.64 and ANZ increased 0.56 per cent to $32.10

Among energy stocks, Origin fell 8.16 per cent for the week to $11.25 and Santos crashed 16.83 per cent to $8.40.

Origin Energy’s BBB credit rating from Standard & Poor’s has escaped unscathed by the cut in oil price forecasts, though the position of some other oil and gas players such as Santos is understood to be under review.

Among other energy stocks, Sundance collapsed 21.43 per cent to 55¢, Senex dived 14.93 per cent to 28¢, Horizon Oil fell 7.50 per cent to 19¢, and Beach Energy dropped 9.76 per cent to 93¢. Woodside dipped 0.11 per cent for the week to $35.71.

Mining stocks also had a poor week. BHP fell 1.62 per cent to $30.42 while Rio Tinto did worse, slipping 3.32 per cent to $57.14.

It was announced on Friday the two mining giants are on the verge of securing a long-awaited land-swap deal allowing them to build a huge $US6 billion copper mine in the United States. The US House of Representatives voted overnight to approve a transfer of federal government land to the Rio-BHP joint venture in the state of Arizona. Both companies, however, fell on Friday despite the news.

Mount Gibson shares were smashed on Friday morning after it cuts its sales target and suspended operations on Koolan Island, flagging job cuts. The mine was shut after extensive flooding in October. The miner was the week’s worst ASX200 performer, its share price collapsing 50 per cent to just 21 cents.

Gold stocks finished the week higher even after the failure of the Swiss referendum that would have led the Swiss National Bank to massively boost its holdings of bullion. Newcrest closed 0.87 per cent higher for the week at $10.43 and Regis Resources finished 2.43 per cent higher at $1.48.

Elsewhere in the market, shares in aged-care operator Estia plunged after listing on the ASX, finishing the session at $4.74 from their $5.75 issue price in a horror market debut.

The company raised $725 million in the fourth-biggest IPO of the year. The float was priced on a multiple of 21 times forecast earnings and gave Estia a market capitalisation of $1.035 billion.

Engineering and construction company Bradken was a star performer on Friday, rocketing 36.45 per cent on the day to $4.53 on the back of a takeover offer by private equity firms PEP and Bain Capital. It finished the week 24.79 per cent higher.

Australia’s largest fertility clinic operator, Virtus Health, finished 4.73 per cent higher for the week at $7.31 on the back of news it acquired a controlling 70 per cent stake in Tasmania’s only IVF provider, TasIVF.

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