Stocks lift on energy sector

The local market has closed in the black, as crude oil prices pushed energy stocks sharply higher.

The Australian sharemarket has ended higher despite fading sharply in afternoon trade, as the big banks gave back gains and two of the country’s biggest miners were shunned.

At the closing bell, the benchmark S&P/ASX 200 index had added 10.1 points, or 0.18 per cent, to 5,475.8, while the broader All Ordinaries index gained 12 points, or 0.22 per cent, to 5,563.4.

At one point the benchmark traded up three quarters of a per cent, but buying pressure wilted as the day progressed.

The positive showing came after two days of heavy falls after the RBA opted to cut interest rates.

The leader through the session was the energy sector, with crude prices again becoming a bellwether for the broader market, according to IG chief market strategist Chris Weston.

“Oil has once again established itself as the central thematic behind the world’s financial markets and the fact we saw such a powerful reversal at the trend low, despite US dollar strength, has driven a slight uplift in sentiment,” he said.

Mr Weston added the next offshore session would be crucial as traders need to see consolidation of the recovery to stir further confidence.

The energy sector’s 2 per cent gain was led by Santos’ 6.7 per cent surge to $4.59.

Rival energy group Woodside Petroleum added 0.72 per cent to $26.63, while Origin Energy advanced 2.4 per cent to $5.46.

The news wasn’t so impressive in the materials space as a strong open gave way to a mixed finish.

BHP stood out, climbing 1.2 per cent to $19.31, but Fortescue lost 2 per cent to $4.32 and Rio Tinto retreated 1.6 per cent to $48.62 as investors analysed its half-year earnings report, which came broadly in line with expectations.

The latter two companies both started the session with gains of 2 per cent, but their fall from grace through the day was indicative of the reversal of fortunes for the broader market.

The earnings season began to ignite with updates from Downer EDI, Tabcorp, Suncorp and ALE Property Group.

A positive trend emerged, even if the results were unremarkable across the four companies, which spanned a broad range of sectors.

Engineering group Downer leapt 7.6 per cent after reporting a profit drop that was less severe than expected, wagering giant Tabcorp edged down 0.2 per cent despite also topping projections, pubs owner ALE ended flat as it matched guidance and Suncorp tacked on 0.7 per cent despite falling just shy of forecasts.

Mr Weston said investors would largely be looking for companies to avoid any nasty surprises through reporting season.

“According to most sell-side analysts the view that ‘boring is good in this environment’ has been noted,” he said.

The big banks closed mixed, with ANZ and Commonwealth Bank in the red and NAB and Westpac advancing after sentiment was hurt by the threat of increased political intervention.

The federal government announced plans to have the big four banks present to a parliamentary committee once a year in order to “boost accountability”, although it again rejected the idea of a royal commission.

The retail sector garnered plenty of attention as official June retail sales were released by the ABS, undershooting market expectations.

Despite this Myer jumped 1.6 per cent as the numbers noted clothing and department store sales as the shining lights through the month.

Grocery retailers Woolworths and Wesfarmers ended up 0.9 per cent and 0.1 per cent, respectively.

Elsewhere, Vitaco bounded 20 per cent after accepting a takeover offer from Chinese interests, while Seven West Media leapt 5.3 per cent and News Corp climbed 1.1 per cent despite the ACCC flagging concerns with a proposed sale of News assets to Seven West in WA.

Among blue chips, Telstra ended steady at $5.70 and Qantas closed flat at $3.14.

Meanwhile, the Australian dollar hovered around the US76c mark, ending the local session almost in line with where it started at US75.94c.