A great finish to the week as our markets followed positive overnight leads: the XJO index added 36 points or 0.61% to 5968.4, leaving us within striking distance of the 6,000 milestone level.
The clear standout today and for this entire week was the energy sector as energy stocks gained positive momentum following the price of oil higher. For the day, the energy sector was the most powerful, rising 1.74% and for the week adding 5.3%
Santos Ltd added 2.04% to 7.52, Woodside Petroleum rose 2.26% to 34.90 and Oil Search lifted 1.44% to 7.73.
The materials sector was the loser today down 0.09%: BHP Billiton (LONDON:BLT) shed 0.17% to 30.14 while Rio Tinto (LONDON:RIO) rose 0.55% to 56.89. Fortescue Metals dropped 3.97% to 181.5 as iron ore futures were getting smashed during the Asia session, off 2.9%.
Treasury Wine Estate (TWE) was one of today's leaders, up 3.68% to $5.64. TWE has gone through restructuring of late, selling off a number of brands in both Australia and the US. In addition, it has been recognised that it will also write off $50m in the beginning of a cost cutting exercise.
It is these initiatives along with the rising USD and GDP that has investors buying in to our Australian wine producer. In late February TWE set a new 20-month high but failed in its efforts. Today, TWE set a fresh high and closed above its previous attempt.
Incitec Pivot has taken a break from its recent stellar performance since December, down 1.4% to $4.24. IPL has benefited greatly from the weakening AUD and today's retrace comes after a strong surge since Monday.
Earlier this week, we spoke of both Myer and Fortescue Metals who both had strong speculative spurts from newspaper articles. Both companies retraced strongly today, off over 3% each.
An idea was put to me at lunch which I’d like to share – why would you announce a take-over after a strong speculative spurt when your premium paid is less favourable and the bid more likely to be rejected? Instead, wait for things to settle and investor will jump at your offer on a surprised share price.
The Aussie dollar fell on the back of a disappointing home loans number (actual 1.2% versus a forecasted 3%) and better than expected Chinese CPI. The interim resistance level would be 0.7735 and we expect AUDUSD to make further selling as the iron ore prices continue to make a fresh low towards 0.7650 (down 3% today).
The ASXSP200 opened surprisingly weak but it climbed up to make an intraday high at 5,968 as the big four banks finally rebounded after three days of selling. The support level is at 5,925 which has been holding up comfortably this week.