The Australian share market surged more than 1.5 per cent today as investors cheered news that the US has struck a deal to raise the nation’s debt ceiling in order to avoid default. The major banks and miners led broad based gains with the blue chips pushing forward, despite lighter trade due to a bank holiday in New South Wales and the ACT.
The S&P/ASX200 Index rose 73 points to close at 4,498. On the futures market, the SPI is up 92 points.
Overseas economic news
US Congressional leaders today reached a compromise to lift the US debt limit and cut $US1 trillion dollars in spending over the next 10 years.
China’s manufacturing activity last month fell to its lowest level in more than two years but less than had been expected. The purchasing managers’ index eased to 50.7 in July from 50.9 in June.
Australian economic news
The Housing Industry Association - Jeld-Wen new home sales report has revealed the largest monthly fall in five years. New home sales dropped 8.7 per cent in June to around 8,000, after a fall of 0.2 per cent in May.
TD Securities-Melbourne Institute’s inflation gauge has shown consumer prices increased last month. The gauge rose 0.3 per cent in July after remaining flat in June.
Company news
Shares in takeover target Macarthur Coal Limited (ASX:MCC) gained today on news its suitors, Peabody Energy and ArcelorMittal went hostile in their $4.7 billion bid, meaning, they will take the bid directly to Macarthur Coal shareholders. Earlier in the day Macarthur refused to back the deal it calls "opportunistic", and said it is in talks with a number of interested parties. Shares in Macarthur Coal finished 1.8 per cent higher today at $15.83.
Telstra Corporation Limited (ASX:TLS) took a step closer to its structural separation ahead of the implementation of the National Broadband Network. Australia’s largest telco handed the nation’s competition regulator plans to split its wholesale and retail arms by mid 2018. Shares in Telstra ended the day 1 per cent higher at $3.02.
BHP Billiton Limited’s (ASX:BHP) rose today, but news surrounding the global miner wasn’t all good. Workers at its Escondida copper mine in Chile are still on strike, for the tenth day running. Closer to home, the Greens have accused the South Australian government of bowing down to BHP in negotiations over its $30 billion Olympic Dam expansion.
Boart Longyear Limited (ASX:BLY) gained today after announcing it will refinance two of its existing bank debt facilities, completing the mineral explorer’s capital restructuring plan.
Shares in CBio Limited (ASX:CBZ) plunged today after the drug development company revealed disappointing clinical trial results in rheumatoid arthritis patients of its lead drug candidate.
Shares in Terramin Australia Limited (ASX:TZN) rose after China Nonferrouss Metal Industry's Foreign Engineering and Construction Company announced it would boost its stake in the miner in a deal worth around $4.6 million.
Best and worst performers
All sectors closed higher. The best performing sector was Materials, advancing 264 points to close at 13,457. The sector with the smallest gains was Real Estate Investment Trusts, adding 4 points to close at 791. The best performing stock in the S&P/ASX200 was Bow Energy shares gained 9.8 per cent to close at $1.12. Shares in Kagara and Karoon Gas Australia also closed in higher today. The worst performing stock was OceanaGold Corporation, falling 4.22 per cent to close at $2.27. Shares in The Reject Shop and Australand Property Group also closed lower today.
Commodities
Gold is trading at $US1,613 an ounce. Light crude is up $1.26 cents at $US96.96 a barrel.
