Wary Market Wins Back Ground As Bargain Hunters Make A Deposit

The Age

Thursday July 17, 2008

Trevor Chappell

THE Australian sharemarket shrugged off renewed US financial jitters to close solidly as retailer Woolworths reported good sales and bargain hunters snapped up the big banks and other beaten-down stocks.

The benchmark S&P/ASX 200 Index was up 54.9 points, or 1.14%, to 4870.6, and the broader All Ordinaries added 37.4 points to 4947.5.

The September share price index futures contract rose 36 points to 4851.

Ord Minnett private client adviser Francesco De Stradis said investors were picking up pummelled stocks, especially in the banking sector.

"I would put (the rise yesterday) down to a lot of stocks that have been sold down heavily and are potentially still good value making some recovery," he said.

"But I wouldn't put too much confidence in it. There's still a lot of bad news in the United States and we will continue to follow that."

Mr De Stradis said more negative news in the financial services sector in the US could easily drive stocks down again.

Australia's biggest retailer, Woolworths, lifted 80 to $24.26 as it said its yearly sales rose on the back of a strong performance by its supermarkets division. Woolworths' annual net profit is expected to grow between 21% and 25%.

In the banking sector, National Australia Bank gained 95 to $26.31, Commonwealth Bank jumped $1.27 to $40.02, ANZ advanced 97 to $18.09, and Westpac improved 75 to $19.43.

Among resources stocks, global miner BHP Billiton slipped 7 to $39.29.

Rio Tinto shed 56 to $121.44 as it delivered strong output for iron ore and aluminium in its second quarter.

Oil and gas producer Woodside Petroleum was down $1.88 at $59.55, but Santos lifted 8 to $19.

In the gold sector, Newmont eased 4 to $5.25, Newcrest added 47 to $33.30, and Lihir dipped 10 to $3.17.

The price of gold in Sydney was $US972.40 a fine ounce, down US60 on Tuesday's close of $US973.

The Australian dollar finished weaker for the first time in a week, as the central bank boss hinted that interest rates may have peaked.

The dollar was trading at US97.74 at 5pm, down from Tuesday's close of US97.77. The Aussie had reached a 25-year high of US98.49 in overnight trading on Tuesday, as US Federal Reserve chairman Ben Bernanke said US financial markets were under "considerable stress".

The domestic currency dived after Reserve Bank of Australia governor Glenn Stevens told a business luncheon in Sydney that domestic demand and wages pressures were easing.

Among the retailers, Wesfarmers, which owns Coles, was $1.42 richer at $32.42, and David Jones gained 16 to $2.86.

Among the telcos, Telstra firmed 2 to $4.27, and Optus owner Singapore Telecommunications dipped 3 to $2.63.

In the media sector, News Corp strengthened 38 to $15, and its non-voting stock put on 34 at $14.74.

Consolidated Media picked up 3 to $2.99 and Fairfax was 14 better at $2.78.

A lower oil price overnight helped transport stocks, with Qantas ascending 6 to $3.17, competitor Virgin Blue rising 8 to 66.5, and logistics outfit Toll Holdings gaining 17 to $6.44.

On Wall Street overnight, the Dow Jones Industrial Average fell below 11,000 points for the first time in two years to close down 92.65 points, or 0.84%, at 10,960.01. -- AAP

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