June 29, 2012
Australian shares ended sharply higher today, after European leaders agreed that eurozone banks could be recapitalised without adding to government debt, soothing fears over growing credit strains in Italy and Spain.
Global markets cheered the eurozone emergency action, immediately soaring when the plan was announced early afternoon eastern Australian time.
‘‘Just when everyone was preparing for a boring end to the week and the financial year, a few EU summit headlines have jolted the market out of its malaise,’’ said IG Markets analyst Cameron Peacock.
The benchmark S&P/ASX200 index rose 49.8 points, or 1.2 per cent, to 4094.6, after trading lower in the morning session, while the broader All Ordinaries index added 49.9 points higher, or 1.2 per cent, to 4135.5.
The Australian dollar jumped as well, moving more than 1 US cent higher on the news to $US1.0143 from $US1.0073.
Dow futures also rocketed ahead of tonight's on Wall Street. They were recently 140 points higher at 12666, suggesting a bumper end to the week for US stocks.
ASX ends year with losses
The news helped to lift sentiment on the last trading day of the fiscal year. The market shed 11 per cent over the past 12 months, far underperforming US and other markets, hurt by worries over a slowdown in China.
The ASX200 posted a 1.15 per cent rise for the week, breaking a run of three straight weeks of losses. It also added 0.45 per cent for the month, but was still down 5.55 per cent for the quarter after heavy losses in May. Since the beginning of the year the benchmark index has added 0.9 per cent.
CMC Markets chief market analyst Ric Spooner said the news from the European leaders summit was encouraging but did not mark the conclusion of the eurozone’s woes.
‘‘They’ve been positive developments as I see them, but it is an incremental step,’’ Mr Spooner said.
Mr Spooner said global markets were likely to rally in the wake of the European leaders summit, which runs for two days, but it was unlikely to be a big one.
David Jones bid fires up retailers
Most sectors ended sharply higher, with materials and energy leading the gains, rising 2 per cent and 1.6 per cent respectively, while financials rose 1.2 per cent.
Consumer discretionary stocks enjoyed a bumper day, after upmarket retailer David Jones received a $1.65 billion takeover offer by UK-based EB Private Equity.
David Jones shares soared 33 cents, or 14.6 per cent, to $2.59, while Myer rose 7.5 cents, or 4.9 per cent, to $1.615 and Harvey Norman added 54 cents, or 2.6 per cent, to $1.95.
‘‘These events (the takeover bid) are helpful for market sentiment when they come at a time when prices have been low,’’ Mr Spooner said. ‘‘They are a reminder that you need to be careful about getting out of things at very low prices because somebody else will take advantage of it.’’
Among the big miners, BHP jumped 72 cents, or 2.3 per cent, to $31.44 and Rio gained $1.34, or 2.4 per cnt, to $56.50.
Fortescue shares rose 2 cents, or 0.4 per cent, to $4.90, despite chairman Andrew Forrest buying another 6 million shares, or 0.6 per cent, in the company he founded.
Grocery wholesaler Metcash was one of the biggest losers of the day, slumping 9.9 per cent, or 37 cents, to $3.37 after coming out of a trading halt on the back of a capital raising.
Fairfax Media rose 1.5 cents, or 2.8 per cent, to 55.5 cents. Major shareholder Gina Rinehart this afternoon sent an open letter to Fairfax chairman Roger Corbett calling on him to accept a "performance milestone" of returning the share price to 87 cents.
News Corp was down 34 cents at $22.03 after the company rallied yesterday on plans to split into two separate publicly traded companies. News Corp’s non-voting scrip was 23 cents weaker at $21.90.
News Corp’s Australian newspapers and pay TV companies will stay together while worldwide the media group’s publishing assets are split off from TV and film under a restructure announced by the company overnight.
BusinessDay with agencies