Stocks close firmly higher as M&A boosts sentiment

The local market has now wiped out Monday’s loss, with the gaming sector firmly in focus.

The Australian sharemarket enjoyed a second straight day of solid gains on Wednesday and has now wiped out Monday’s heavy loss, thanks to positive action offshore and M&A activity at home.

At the close, the benchmark S&P/ASX 200 index had lifted 24.6 points, or 0.45 per cent, to 5,435.4, while the broader All Ordinaries index gained 26.4 points, or 0.48 per cent, to 5,518.4.

The focus through the session was a giant $11.3 billion merger of Tabcorp and Tatts Group, which drove strong volumes in the shares of the two wagering groups.

Tabcorp jumped 3.6 per cent on news of the cash-and-scrip acquisition, while Tatts remained 7 per cent shy of the offer price despite surging 15.8 per cent, a sign investors are not yet convinced it will receive regulatory approval.

The gaming and wagering sector has been the driver of the market this week in light of Monday’s 13.9 plunge in Crown stock, which followed the arrest of several of its employees in China.

Crown made a very modest recovery yesterday but again turned lower on Wednesday as investors pondered the impact on its VIP operations.

By the close, Crown was off 3 per cent, while rival Star Entertainment stumbled 2.2 per cent.

A rise in iron ore prices offshore helped draw investors into Fortescue, with its shares advancing 0.4 per cent to $5.15.

Among the mining giants, Rio Tinto added 0.3 per cent to $50.74, while BHP Billiton slipped 0.8 per cent to $22.47 as analysts were lukewarm on a quarterly production report that warned guidance for its Olympic Dam operation may need to be trimmed.

“BHP’s first-quarter production result was below our expectations as in-line output from iron ore and petroleum was offset by weaker copper and coal production,” Macquarie analysts wrote in a note.

“We continue to expect iron ore shipments to be at the low end of the range, while copper guidance is likely to come under pressure due to the power outage at Olympic Dam.”

Gold miners outstripped the market due to gains in the precious metal’s valuation, with Newcrest surging 3.3 per cent, Independence Group shooting up 5.7 per cent and Regis Resources bouncing 0.6 per cent.

In energy, Santos climbed 0.3 per cent to $3.67 and Woodside edged up 0.2 per cent to $29.30, although Origin Energy dipped 0.9 per cent to $5.62.

The finance sector struggled for direction, with NAB leading the way through a 0.3 per cent gain, while ANZ and Commonwealth Bank tacked on 0.1 and 0.2 per cent, respectively.

Westpac was the laggard as it lost 0.1 per cent.

Among other blue chips, Telstra rallied 1.2 per cent to $5.09, while Qantas lifted 2.2 per cent to $3.21.

Elsewhere, retailer Godfreys surged 7.8 per cent as it announced a restructure to a majority franchise model and engineering group CIMIC bounded 2.6 per cent as it ushered in a new CEO.

Meanwhile, the Australian dollar was steady around US76.7c as a morning bounce was stymied by mixed Chinese data.