Local stocks continue to climb back from heavy losses

Local stocks clawed back more ground after a better-than-expected yuan fixing calmed markets.

The indicator board at the Australian Securities Exchange in Sydney. Picture: AAP

After falling as much as 0.9 per cent in early trade on weaker-than-expected earnings, the local sharemarket staged a recovery to finish firmly higher after China fixed its yuan at the weakest price since 2008 on Thursday morning.

At the close of trade on Thursday, the ASX benchmark S&P/ASX200 had lifted 48.644 points, or 0.75 per cent to 6568.102 points. The broader All Ordinaries index had risen 53.77 points, or 0.82 per cent to 6642.301 points.

The market turned positive after the People’s Bank of China fixed the yuan at 7.0039 against the US dollar, which was the first time above 7 since 2008. The move eased fears of worsening trade tensions in the wake of China being labelled a currency manipulator by the US.

“The CNY Fix is the number one game in town and will continue to dictate the pace of play for risk assets over the near term,” said VM Markets managing partner Stephen Innes.

“Nothing else matters at this stage.

“Today signalled to investors that the People’s Bank of China is using market synergies drive the fix while trying to tame the beast by slowing the move higher, which has markets breathing a sigh of relief as this does signal an unwillingness to engage in a currency war while offering a trade truce gesture the US administration.”

Strength in the local market on Thursday followed a bout of risk aversion in global markets overnight which saw the S&P 500 briefly down 2 per cent overnight, while German and Australian bond yields hit fresh record lows and the price of gold above $US1500 for the first time in 6 years.

Rio Tinto lost 1.1 per cent to $88.52 as it traded ex-dividend, while Fortescue put on 4.1 per cent to $7.34.

BHP advanced 1.5 per cent to $37.30 after it announced it had approved funding to develop its oil and gas project in Trinidad and Tobago, which has estimated recoverable resources of 13.2 million barrels of oil and 274 cubic feet of natural gas.

In financials, Westpac edged up 0.1 per cent to $28.06, despite being slapped with a $1.5m APRA fine, while NAB added 0.2 per cent to $27.73. Commonwealth Bank put on 0.3 per cent to $78.96, while ANZ underperformed its peers, losing 0.5 per cent to $26.81.

IAG dropped 5 per cent to $7.68 after the insurance company’s full-year results fell short of market expectations.

Mirvac surged 6.6 per cent to $3.40 after it said its residential sales held up over the past year, as it unveiled a full-year profit dip of 6 per cent on the prior period.

AGL lost 4.6 per cent to $19.08 after it unveiled a full-year profit slump and flagged a lower underlying after tax profit for fiscal year 2020.

Apparel retailer Kathmandu shot up 14.3 per cent to $2.32 after said it was on track for a record annual profit when it releases its full-year results in September.

The energy sector was mostly higher despite a tumble in the oil price overnight on an unexpected build up in US stockpiles and fears of slowing demand.

Origin Energy improved 0.7 per cent to $7.12 while Santos progressed 1.1 per cent to $6.65. Oil Search turned up 1.3 per cent to $6.96 while Woodside Petroleum grew 1.3 per cent to $33.18.

The Australian dollar was trading flat at US67.76 cents in late trade.