Stocks eke out minor gain

The local market has defied energy sector weakness to close marginally in the black.

The Australian sharemarket eked out a modest gain at the close after enjoying a broad-based rally in afternoon trade, headlined by strength in the big miners and banks.

At the closing bell, the benchmark S&P/ASX 200 index had edged up 3.9 points, or 0.07 per cent, to 5,537.5, while the broader All Ordinaries index tacked on 5.1 points, or 0.09 per cent, to 5,612.6.

The gains dragged the market to a new 11-month closing high, which had appeared a stretch in morning deals, with stocks retreating as much as 0.6 per cent as energy stocks and retailer Woolworths weighed heavy.

The energy sector still ended as the market’s worst performer thanks to falls of close to 1.5 per cent, while Woolworths almost single-handedly forced the consumer staples sector into the red, although both sectors ended off their lows.

The sell-off in energy came after crude prices slid to a three-month trough during the offshore session.

Santos – which is heavily impacted by oil price movements – ended down 2.4 per cent at $4.56, while Woodside lost 0.84 per cent to $27.12.

Meanwhile, Woolworths slumped 3.3 per cent to $23.50 as analysts doubted the extent of the rally in its share price on Monday. The retailer had soared 8 per cent to a six-month peak in the prior session as investors cheered modest positive signs in its turnaround.

The weakness served as a direct contrast to the finance sector, which outperformed all others through gains of around 0.6 per cent.

Among the big four, ANZ outpaced its rivals with a rise of 0.9 per cent, while Westpac trailed thanks to a more modest 0.5 per cent lift.

The financial sector will be in the spotlight tomorrow as the ABS releases inflation data for the June quarter that is seen as crucial to the Reserve Bank’s August rate call.

A potential cut from the RBA could be seen as both a positive and a negative as it may threaten margins, but would also drive a hunt for yield that bank stocks offer in spades.

Analysts at Macquarie believe the inflation numbers could move several sectors tomorrow given futures markets are not yet fully pricing in a rate cut for August.

“The surprisingly muted degree of conviction around the timing of further RBA easing means that the CPI presents a clear catalyst for the Australian dollar, and arguably for market perceptions around sectors that may be perceived to benefit from rate cuts (e.g. housing and consumer-related),” Macquarie said.

Elsewhere, mining giants BHP and Rio Tinto both ended higher, advancing 0.1 per cent and 1.1 per cent, respectively, while iron ore miner Fortescue jumped 1.7 per cent to $4.12.

Among the day’s newsmakers, Seven West Media tumbled 4.6 per cent as it said it was weighing its options for its Yahoo joint venture, ALS weakened 2.3 per cent as it tipped a slide in first-half profit, Northern Star Resources ended flat after it declared a record full-year profit and SAI Global edged down 0.9 per cent after putting its assurances arm up for auction.

Among blue chips, Telstra gave back 0.86 per cent to $5.77 and Qantas rose 0.66 per cent to $3.03.

Meanwhile, the Australian dollar edged up to US75.15c at the end of local trade, rising US0.4c as sentiment improved through the session.