Stocks eke out positive close

Buoyant miners and banks have managed to offset spots of corporate earnings disappointment.

Investing, sharemarket, generic, Australia

The Australian sharemarket has ended marginally in the black as strength in the big banks and miners offset disappointment in Wesfarmers’ earnings result and the impact of Telstra trading ex-dividend.

At the closing bell, the benchmark S&P/ASX 200 index rose 7.9 points, or 0.14 per cent, to 5,561.7, while the broader All Ordinaries index added 6.5 points, or 0.12 per cent, to 5,653.6.

IG market analyst Angus Nicholson said the market remained in a state of flux as traders were taking a mostly lacklustre earnings season in stride.

“The ASX has barely broken out of the 5,500-5,560 trading range through much of August, despite what has in many respects been quite a disappointing earnings season,” he said.

“Trading volume in August has by-and-large been much lower than the 100-day moving average. There does seem to be a feeling in global markets that many investors are waiting for everyone to return from northern hemisphere summer holidays to see some direction in markets.”

Telstra alone wiped 9 points from the index on Wednesday as it fell 3.5 per cent to $5.30, while Wesfarmers was responsible for another 4 points being trimmed as it weakened 2.2 per cent to $42.63 after delivering a mixed full-year update.

The moves were comfortably offset by a heavy bid on the banks, with the big four up between 0.5 per cent and 1.1 per cent. The leader was Westpac for a second day, while ANZ served as the laggard.

High-yielding utilities were also in vogue after a steady result from APA Group pushed that company’s shares up 0.4 per cent.

“With valuations high, and yields low, we have seen much of the gains in the past week being driven by funds seeking out the more safe-haven like parts of the market, such as utilities, consumer staples and piling into higher yielding names,” Mr Nicholson said.

The resources sector also played a significant role in the rally as crude and base metal prices ended mostly higher in offshore deals.

BHP Billiton jumped 1.6 per cent to $21.42, Rio Tinto also lifted 1.6 per cent – to $49.82, while iron ore miner Fortescue surged 2.7 per cent to $5.03 after Moody’s raised the group’s credit rating.

BHP closed at a 2016 peak, while Fortescue was at its highest mark in two years.

The gains in energy were more restrained as Santos tacked on 0.4 per cent and Woodside rose 0.9 per cent.

Qantas and two big names in the dairy sector were among the day’s other big winners, with the former rising 1.5 per cent to $3.45 as it reinstated its dividend and booked a record profit.

Meanwhile, Murray Goulburn rallied 0.8 per cent as investors were comforted by news it had met its downwardly revised profit forecasts, while Bega Cheese advanced 2.1 per cent after more than doubling its yearly profit.

A2 Milk went in the opposite direction, however, tumbling 6 per cent despite swinging to a profit.

It was not alone in incurring the wrath of traders after delivering modest guidance, with Worley Parsons skidding 2.7 per cent after falling short of market projections, longtime market darling Blackmores plunging 19 per cent on concerns about the sustainability of its rapid growth and McMillan Shakespeare diving 10 per cent on worries about its most important contract.

Other big movers on the back of earnings report were Spotless, Ardent Leisure and iSentia, which all soared around 10 per cent on positive outlooks, while building products supplier Boral stumbled 5 per cent as its guidance failed to flatter and troubled law firm Slater & Gordon sank 10 per cent as it warned on a loss above $1 billion.

Meanwhile, the Australian dollar extended its retreat, moving below US76c and ending the local session at US75.9c.