Stocks close firmly in the black

The local market’s sentiment was boosted by higher iron ore prices and a rebound in Crown’s price.

The Australian sharemarket has rebounded from Monday’s heavy fall, boosted by a modest bounce in Crown’s shares and strength in the resources space after iron ore prices rose offshore.

At the close, the benchmark S&P/ASX 200 index had advanced 22.1 points, or 0.41 per cent, to 5,410.8, while the broader All Ordinaries index rallied 21.1 points, or 0.39 per cent, to 5,492.

CMC Markets chief market strategist Michael McCarthy said the local market was at an “inflection point”, with Thursday’s labour market report crucial to the near-term direction of the market.

“The conundrum at the moment is that Australia is approaching a level where economists would argue there is full employment, yet wages growth is weak,” he said.

“That’s why this week’s job numbers are so important. A high quality pick up in jobs would lift investor confidence. “

Mr McCarthy said a reading between 30,000 and 50,000 job increases would likely boost valuations, a rise below 30,000 would have little impact on equities, while a fall in jobs should stir selling pressure.

“This data comes at a time of fine balance for shares,” he added.

“The 5,400 level acted as resistance to market rises between later 2015 and the middle of this year. After breaking through, the former resistance becomes support.

“Should the market drop below 5,400 there is a danger selling could accelerate. Alternatively, a bounce off support could see the index testing the 2016 high at 5,610.”

The market focus remained on James Packer’s Crown Resorts through the day’s trade as investors pondered the ramifications of the arrests of 18 Crown staff members in China, likely in relation to gambling promotion activities.

A 13.9 per cent plunge in its share price yesterday encouraged Deutsche Bank to raise its rating on the stock to ‘buy’, which in turn helped drive a 1.7 per cent rebound in its shares on Tuesday.

Rival Star Entertainment was not quite so lucky, losing a further 0.5 per cent.

The materials sector trended higher after iron ore prices extended their winning run, with BHP Billiton jumping 1.1 per cent to $22.64 and Fortescue climbing 2.4 per cent to $5.13, while Rio Tinto bucked the trend to end broadly flat at $50.61.

In energy, Santos bounced 1.1 per cent to $3.66, Origin Energy gained 1.4 per cent to $5.67, while Woodside added 0.4 per cent to $29.23.

The finance sector enjoyed a steady bid after a lacklustre open, with ANZ’s 0.8 per cent advance leading the way.

Commonwealth Bank put on 0.3 per cent, NAB won 0.5 per cent and Westpac rose 0.5 per cent.

Among other blue chips, Telstra was steady at $5.03, while Qantas retreated 1.4 per cent to $3.14.

Elsewhere, Tatts and Tabcorp were in a trading halt pending a likely merger, while investment management group Challenger surged 6.2 per cent after reporting a strong third quarter and Caltex dived 4.2 per cent after confirming an interest in Woolworths’ $1.5 billion petrol retail business.

Meanwhile, the Australian dollar surged half a cent to US76.7c as traders trimmed bets on further RBA rate cuts and as oil rose through Asian trade.