Jumping at open the Australian share market surged 1 per cent and remained buoyant throughout to close near session highs. Local stocks notched up their tenth straight session of gains following the government’s mini-budget release and ahead of the Reserve Bank of Australia’s interest rate decision next week.
Across the sectors strength was seen in the mining and banking sectors while the gold sector sank 3.9 per cent. The price of the precious metal has come off as the US economy continues to show signs of improvement.
Attention will now turn to the monthly US jobs report due for release this evening with expectations the economy added 185,000 jobs in July [195,000 added in June] and the unemployment rate fell to 7.5 per cent [7.6 per cent in June].
Figures
The S&P/ASX 200 climbed 55 points today, widening the weekly gain of 66 points to finish at 5,117.
The value of trades was $4.1 billion on volume of 729 million shares at the close of trade.
The top three stocks by value were BHP Billiton Limited
(ASX:BHP), Commonwealth Bank of Australia
(ASX:CBA) and Wesfarmers Limited
(ASX:WES).
On the futures market the SPI is 57 points higher.
Wall Street
US stocks have gained over the four trading days this week: The Dow Jones Industrial Average has put on 72 points, the S&P 500 Index has put on 17 points, the Nasdaq has put on 71 points and the 100 Index has put on 65 points.
Economic outlook
The Labor Government has cut Australia's economic outlook and tipped the budget deficit will blow-out on the back of falling revenues from lower commodity prices and higher unemployment. The Labor government’s updated economic statement forecasts:
- The budget deficit is expected to hit $30.1 billion this financial year, up from $18 billion forecast in May.
- Growth is predicted to slow to a below average pace of 2.5 per cent, down from 2.75 per cent.
- The unemployment rate is expected to climb to 6.25 per cent, up from of 5.75 per cent.
The Australian Treasurer Chris Bowen also confirmed the introduction of a new 0.05 per cent levy on bank deposits from 2016 and maintained the government’s pledge to return to surplus in 2016-17.
Economic news
The Australian Bureau of Statistics (ABS) released the producer price index and overseas arrivals and departures figures today. The producer price index came in weaker than expected, growing 0.1 per cent in the June quarter and 1.2 per cent year-on-year.
International visitor arrivals jumped to a record high in June as Australians welcomed fans of the British and Irish Lions to the rugby test series. The ABS reports June visitor arrivals rose 7.6 per cent in June after rising 0.6 per cent in May and falling 1.8 per cent in April.
Company news
Westpac Banking Corporation
(ASX:WBC) has been inundated with disgruntled customers for the second day after its internet banking services went down again. A spokesperson for the bank conceded the bank was experiencing intermittent issues today after its online banking site was down for about eight hours yesterday. Shares in Westpac rose 1.91 per cent today, ending the week at $31.46.
Paladin Energy Limited
(ASX:PDN) has launched a capital raising after deciding to ditch plans to sell a stake in its flagship Langer Heinrich Mine in Namibia. The uranium producer blamed the depressed uranium price for impacting valuations of the mine and has also revealed a $US180 million impairment charge, mainly due to its Kayelekera mine in Malawi. Paladin Energy’s shares remain in a trading halt, having last traded at $1.00.
Shares in dual-listed ResMed Inc
(ASX:RMD) gained 2.44 per cent after posting a 21 per cent jump in its full year net profit and hiking its dividend by 47 per cent. The sleep apnoea equipment maker’s result was boosted by a strong fourth quarter when revenue rose to a new record.
Shares in OrotonGroup Limited
(ASX:ORL) slumped 7.1 per cent after spooking the market with profit guidance. The fashion retailer has affirmed its Asian expansion but forecast its earnings will shrink amid a challenging and discounted Australian retail market.
Best and worst performers
The best performing sector was financials excluding real estate investment trusts adding 105 points to close at 6,617.
The worst performing sector was real estate investment trusts, losing 5 points to close at 1,016 points.
The best performing stock in the S&PASX 200 was Magellan Financial Group Limited
(ASX:MFG), rising 5.52 per cent to close at $12.04. Shares in Arrium Limited
(ASX:ARI) and Linc Energy Limited
(ASX:LNC) also closed higher.
The worst performing stock was Resolute Mining Limited
(ASX:RSG), dropping 10.06 per cent to close at $0.71. Shares in Silver Lake Resources Limited
(ASX:SLR) and Medusa Mining Limited
(ASX:MML) also closed lower.
IPOs
Steadfast Group Limited
(ASX:SDF) started trading today in what was the second largest float of the year. The insurance broking network saw a strong debut - listing with an issue price of $1.20, opening at a sharp premium of $1.35 and closing at $1.42.
Commodities
Gold is trading at $US1,303 an ounce, down $44.58 over the week.
Light crude is $0.73 lower at $US108.62 a barrel.
The Australian dollar
The Australian dollar is buying 89.19 US cents, down $US0.0347 over the week.
