Stocks lift despite S&P warning

The local market has shrugged off a downgrade to Australia’s credit outlook, to end firmly in the black.

A positive lead from Wall Street has driven the Australian market higher, despite the negative impact of a warning that the nation’s triple-A credit rating is at risk.

Standard & Poor’s has downgraded Australia’s credit rating outlook from stable to negative, and said the prospects for improvement in the federal budgetary position have weakened due to the uncertain election outcome.

The ratings agency also put Australia’s major banks on credit watch, while downgrading the outlook for the states of New South Wales and Victoria, along with the Australian Capital Territory.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX 200 index had lifted 30.40 points, or 0.58 per cent, to 5227.9 points. The broader All Ordinaries index was up 26.3 points, or 0.5 per cent, to 5311 points.

Standard & Poor’s revision to its outlook for the big four banks came as the market was closing for the day.

But most of the big four largely bucked concerns about the effect of agency’s moves to close in the black, despite paring earlier gains.

ANZ added 0.4 per cent, CBA lifted 0.7 per cent, Westpac rose 0.5 per cent. NAB was the exception to the trend, sliding 0.2 per cent. Ahead of the announcement on the federal ratings outlook the big four had all traded up over 1 per cent.

Patersons Securities economist Tony Farnham said the outlook downgrade was not a surprise given the uncertainty of the federal election outcome.

The hard decisions needed on spending and revenue are unlikely to be made in the next parliament, Mr Farnham said.

“That sort of process is going to be a challenge obviously to get through the House of Representatives but even a larger challenge to get through the Senate considering the shape that it looks to be coming up to,” he said.

Woodside Petroleum led the energy sector higher following a slight recovery in energy prices overnight, adding 22 cents to $26.55, while Santos gained 18 cents to $4.75.

Rio Tinto rose 57 cents to $47.38 and BHP Billiton gained 37 cents to $19.08.

The banks broke a four day losing streak, led by Commonwealth Bank and Westpac.

CIMIC shares dropped $5.99, or 16.5 per cent, to $30.25 after Morgan Stanley said it expects the construction group’s shares to lose ground over the next two months following a recent rally. The broker also cut its price target by about five per cent, Mr Farnham said.

AGL Energy dropped 42 cents to $19.90 after the energy retailer’s profit warning for the 2016/17 year.

Shares in wagering firm Tabcorp dropped 20 cents to $4.39 after the NSW government announced a ban on greyhound racing.

Meanwhile Kogam.com closed down 30 cents, or 16.7 per cent, at $1.50, marking a disappointing debut on the local market.

But Michael Hill rose 10 cents, or 8.7 per cent, to $1.25 as it flagged a rise in annual earnings, during its first day of primary listing on the ASX.

Medibank Private was steady at $2.94 after saying it won’t be able to provide annual tax statements on time to the majority of its customers because of a problem upgrading its technology.

- with AAP