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Market report: Monday, February 29


UPDATED: The Australian share market is up strongly at lunchtime, led by financial sector and mining stocks.

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Fifteen of Australia’s 20 biggest companies are in positive territory on the local bourse, as the February earnings season nears the end.

Investors have been heartened by the better-than-expected results from more than half the companies that have reported, with the exception of mining groups.

Westpac shares were up 50 cents at $29.06, the Commonwealth Bank of Australia gained 54 cents to $71.24, National Australia Bank rose 28 cents to $24.69, and ANZ Bank rose 17 cents to $22.73.

Rio Tinto shares jumped rose 82 cents to $40.82 and BHP Billiton gained 25 cents to $15.84.

Investors will be watching Tuesday’s Reserve Bank board meeting, not so much for a move in the official interest rate, but for signs of easing bias by the RBA.

At 12.10pm (AEDT), the benchmark S&P/ASX200 index was up 38 points, or 0.78 per cent, at 4,916.5 points.

The broader All Ordinaries index was up 35.3 points, or 0.7 per cent, at 4,980.4, points.

The March share price index futures contract was up 47 points at 4,900, with 17,299 contracts traded.

National turnover was 776.5 million securities traded, worth $1.47 billion.

Earlier, at 8.02am (AEDT) on Monday, the share price index futures contract was up seven points at 4,860.

The US data, an upward revision from its previous estimate of 0.7 per cent growth, exacerbated concerns that the Federal Reserve could raise rates sooner rather than later.

In local economic news on Monday, the Reserve Bank of Australia is due to release financial aggregates for January while the Australian Bureau of Statistics releases its business indicators for the December quarter.

The TD Securities-Melbourne Institute inflation gauge for December is also due out.

In equities news, Slater and Gordon, Recall Holdings, Cash Converters, Murray Goulburn and Pacific Current Group are slated to post half year results.

The local unit was trading at 71.38 US cents, down from 72.20 cents on Friday.

And the Australian share market looks set to open slightly higher after Wall Street put in a feeble mixed performance following data showing gross domestic product expanded at a 1 per cent annual rate in the fourth quarter.

NEW YORK – Wall Street ended lower in a feeble end to another week of strong gains after concerns about the timing of future US interest rate rises offset gains in materials and energy stocks.
The Commerce Department said gross domestic product expanded at a one per cent annual rate in the fourth quarter, an upward revision from its previous estimate of 0.7 per cent growth. The data exacerbated concerns that the US Federal Reserve could raise rates sooner rather than later. The economy grew at a rate of 2.0 per cent in the third quarter.

In other US data, consumer spending rose strongly in January, while underlying inflation picked up by the most in four years.

LONDON – British shares rallied and posted a second week of gains in a row, boosted by a rally in publisher Pearson and London Stock Exchange Group, though Royal Bank of Scotland reported its eighth full-year loss in a row.

“Despite better progress on capital, RBS has reported a disappointing set of numbers with both revenue and costs light due to weak investment bank performance,” analysts at Jefferies said in a note.

It has not turned a profit since its 2008 government bailout during the financial crisis, and its update contrasted with Lloyds, which surprised investors with a dividend in the previous session.

“Overall RBS’ results are in stark contrast to yesterday’s figures from Lloyds, and demonstrate just how much daylight has opened up between the banks since the financial crisis,” Laith Khalaf, senior analyst at Hargreaves Lansdown, said in a note.

Another financial crisis is “certain” and will come “sooner rather than later”, the former Bank of England governor has warned.

HONG KONG – Asian shares made guarded gains as a gathering of world finance leaders provided a welter of reassuring comments, but little in the way of actual policy stimulus.

Setting the tone for the Shanghai meeting of the Group of 20, China’s central bank chief, Zhou Xiaochuan, said Beijing still had the room and tools to support the world’s second largest economy.

Yet, German Finance Minister Wolfgang Schaeuble was quick to declare that the scope for monetary and fiscal policy was exhausted globally and called for more structural reform.

SHANGHAI – The world’s top economies have declared that they need to look beyond ultra-low interest rates and printing money to shake the global economy out of its torpor, while renewing their focus on structural reform to spark activity.

British finance minister George Osborne has pushed financial leaders from the top 20 economies to include the risk of Britain leaving the European Union in their list of dangers to the world economy, gaining explicit support from the United States.


A bounce in the US dollar saw a lift in oil, as well as gold.

US crude settled down 0.9 per cent, or 29 US cents, at $US32.78 a barrel, while Brent settled down 0.5 per cent, or 19 US cents, at $US 35.10 a barrel.

For the week, US crude gained about 11 per cent.


Gold has fallen more than one per cent, as the US dollar and global shares rose, but fund buying persisted as investors expected a G20 summit would produce little in the way of a co-ordinated stimulus program.

“The increase in price this year has been supported by physical purchases, very strong in the funds and concerns are more global in nature, with increasing probability that there will be a recession in the US,” Julius Baer analyst Warren Kreyzig said.

Concerns that a slowing global economy could eventually push the United States into recession eased as data showed US economic growth slowed less than expected in the fourth quarter.

“The GDP data came out better than expected, so it gives strength to the rate debate. If rates go higher, gold goes lower,” said Bob Haberkorn, senior market strategist at RJO Futures in Chicago.


Copper prices have surged to their highest level in more than three months as investors hope for a recovery in metals demand following stronger-than-expected US economic data and a G20 policymakers meeting.

Industrial metals joined rallies in oil and share markets as investors put fears about a struggling global economy on the back burner.

US consumer spending rose solidly in January while fourth-quarter economic growth was revised up to one per cent, higher than expected.

“Metals are finding reasons to surge further. This time it is the good US GDP figures,” said Richard Fu, head of Asia and Pacific at Amalgamated Metal Trading.

“The mood has changed and is improving. I guess the current trend will last until April or early May.”

ASX stocks to watch Monday, February 29

CCV – CASH CONVERTERS: Cash Converters is scheduled to release half year results.

PAC – PACIFIC CURRENT GROUP: Pacific Current Group is slated to post half year results.

REC – RECALL HOLDINGS: Recall Holdings half year results

SGH – SLATER AND GORDON: Slater and Gordon is slated to post half year results on Monday.


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