Investors can breathe easy on Christmas Day after a positive day on the ASX. Photo: Nic WalkerThe Australian sharemarket ended Christmas Eve on a high, boosted for a third day by rising oil prices to post its highest close since the beginning of the month on sharply reduced volumes.
At the close on Thursday, the S&P/ASX 200 was 1.28 per cent, or 65.8 points, higher at 5207.6. This added to gains throughout the holiday-shortened week to leave the index up just under 2 per cent since Monday’s opening.
The broader All Ordinaries Index, meanwhile, closed up 1.2 per cent for the day, at 5256.1 points, to be ahead around 1.95 per cent for the week
Eight of the 10 main sector indices were ahead for the day, with energy and materials the star performers, ahead 3.05 per cent and 3.26 per cent, respectively.
Only the industrial index ended the day down, by 0.12 per cent.
“The Santa rally looks like regaining momentum with a seventh consecutive day of gains,” CMC chief market analyst Ric Spooner said before the close.
“This comes amid signs that short sellers have found themselves on the wrong side of recent moves in commodities and resource stocks.”
Leading the index up were energy stocks, buoyed by the overnight rise in oil prices. The Brent crude oil price climbed 3.4 per cent overnight to $US37.34 a barrel.
“Sentiment towards the commodity sector was helped by a surprisingly large drop in US oil inventories last week as well as recent signalling from Chinese authorities that more stimulus is on the way,” Mr Spooner said.
An unexpected drop in weekly US Energy Information Administration inventories spurred a 3.7 per cent gain in the West Texas Intermediate oil price, IG market analyst Angus Nicholson said.
“Judging by the moves in oil overnight, one could be forgiven for thinking that Santa’s sleigh runs on Light-Sweet Cushing, Oklahoma Crude,” Mr Nicholson said.
On the local index, Beach Energy was the stock leader, up 9.28 per cent at $0.53, followed by Whitehaven Coal, which ended the session ahead 8.66 per cent at $0.69. After leading the board for most of the day, Liquefied Natural Gas eased in afternoon trade to be ahead 6.08 per cent at $0.78. Western Areas was ahead 6.34 per cent at $2.18 and Origin Energy, 6.21 per cent at $4.79.
BHP Billiton was the strongest of the blue chip stocks, closing up 5.34 per cent at $18.34.
However, the relief in oil was expected to be short lived, with production levels remaining high despite chronic oversupply, Mr Spooner said. Brent crude is expected to finish the year at levels not seen in 11 years.
This underlined the ephemeral nature of current market buoyancy, said IG’s Mr Nicolson.
“Whenever one looks at the list of index top performers and sees Beach Energy, Whitehaven Coal, Origin and Fortescue near the top of the list, one can be fairly certain this performance is not likely to be repeated over the coming weeks,” he said.
“China’s slowing economy and need to deal with industrial overcapacity alongside Iran’s return to the global oil market paint a less rosy picture for the commodities space over the coming weeks and months.”
Financial stocks also did well, with the index up 1.18 per cent for the day. Commonwealth Bank of Australia was the strongest, up 1.55 per cent to $83.32. Westpac was next, up about 1.5 per cent at $32.54, followed by Australian and New Zealand Banking group, which advanced just under 1.4 per cent to $27.25. National Australia Bank added 1.34 per cent to $29.39.
Among the day’s losers, rail freight operator Aurizon Holdings lost a further 3.67 per cent, to $4.20, after Wednesday’s downbeat guidance. Mayne Pharma group, Spotless, Flexigroup and Slater and Gordon all lost more than 2 per cent in the shortened session.
“Equity markets look keen to have a good Christmas break and deal with the hangover of ongoing systemic issues in the New Year,” Mr Nicholson said.
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