Australian Stock Market Report - Overview 10/07/2011
Australian shares leapt the most in almost three years as investor sentiment improved on renewed optimism a solution is near at hand for the Eurozone debt crisis. The local market opened more than one per cent stronger after Wall Street surged for its second straight day, then eased slightly after midday but soared in the last hour of trading. By the close, the benchmark S&P/ASX200 index had reached its highest level since September 21, rising 143.4 points, or 3.65 per cent to 4,069.9 and the broader All Ordinaries index up 139.6 points, or 3.5 per cent, at 4,132.1.
That was the biggest increase for the All Ords since November 25, 2008. The December share price index futures contract was up 137 points at 4,072, with about 51,255 contracts traded. Broad-based gains were felt across the board, with all sectors closing higher and only seven stocks on the ASX 200 including Foster's Group, which dropped two cents to $5.27 - falling. Materials, which were among those sectors hardest hit by market declines in recent weeks, ended the day the strongest, rising 4.3 per cent.
The materials sector also benefited from a rally on overseas metal markets on Wednesday, with copper rising in overnight trade for the first time in six sessions, supported by a weaker US dollar. Among the miners, BHP Billiton advanced 3.3 per cent, or $1.17, to $36.30, while fellow miner Rio Tinto gained 4.9 per cent, or $2.98, to $63.28. Atlas Iron climbed 20 cents, or 7.1 per cent, to $3.00, while Fortescue Metals gained 30 cents, or 7.1 per cent, to $4.55. There was also solid support for financials, with all the major retail banks gaining more than four per cent.
National Australia Bank was the strongest stock on the ASX 20, soaring five per cent, or $1.09, to $22.87. Energy stocks also finished 4.1 per cent firmer after crude oil prices rallied on Wednesday after a significant, unexpected drop in US oil stockpiles. Woodside Petroleum ended 4.7 per cent, or $1.54 higher, at $34.34, while Santos closed 24 cents, or 2.1 per cent, stronger at $11.60.
Uranium miner Paladin Energy was the best performing stock on the S&P/ASX100 index, soaring 16.2 per cent, or 19 cents, to $1.36. The worst performer on the same index was Treasury Wine Estate, which fell two cents to $3.88. The spot price of gold was $US1,646.4, up $US22.65 from Wednesday's local close of $US1,623.75.
The Australian dollar leapt higher for the second-straight day Thursday, boosted in part by possible moves from the International Monetary Fund to stem the Euro zone's debt crisis. As the focus in markets remained on Greece, the head of the IMF's Europe department said the fund could create a special financing tool to buy bonds in private markets. The report comes as Germany stepped up pressure on other euro-zone governments to declare how they would recapitalize their banks if the need arose.
Coupled together, the developments helped stocks surge in the U.S., with a subsequent follow through move in Asia that had commodity-linked currencies like the Australian dollar finding buyers. The Australian dollar was at $0.9640, up from $0.9542 late Wednesday and $0.9500 late Tuesday. Against the Japanese yen, the currency changed hands at 74.045, up from 73.211.