Article / 26 November 2014 at 7:19 GMT

Australian Market Wrap: Miners defy ore price slide, big four banks up

Trading Desk / Saxo Capital Markets
Australia
 
  • The lower iron ore price hurt Fortescue, but BHP Billiton and Rio Tinto edged up
  • The Australian dollar fell on RBA comments and the ore price slide
  • Education company Navitas and all four big banks made gains

By Saxo Capital Markets Australia


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The markets received a well deserved bounce today led by gains across all sectors except consumer staples which finished the day flat to down.

The S&P/ASX200 put in a solid performance despite the flat overnight lead from the US: the Index finished the day 61.4 points or 1.15% higher to 5396.2. The financials lifted by 0.91% and materials 0.8%.

Iron ore traded through below $70 to close $69.58 a dry metric ton and this has led iron ore miner Fortescue Metals to close down 2 cents for the day at $2.79. BHP Billiton and Rio Tinto which are both diversified miners, by rallied 1.34% and 1.71% respectively.



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Qantas has been through tough times, but now the flying kangaroo's share price may be ready to make another jump. Photo: Thinkstock


Goldminer Newcrest Mining reached an intra day high of $11.06 or up 4.3%, but reversed the gains made early in the session to close just 4 cents higher, or up 0.38%, at $10.64.

Strong gains were seen across the banks: Westpac led the pack, rallying 1.44% to $33.07 followed by Commonwealth Bank of Australia who was up 1.05% to close slightly above 81.00. National Australia Bank added 0.96% to $32.46 and ANZ Bank closed 0.87% firmer for the day to $32.38.

Navitas Limited (NVT) a global education services provider was today's leader on the green path, with its share up 4.93% to $5.32. The company took a large hit to its share price in July after Macquarie University announced it would part ways in 2016. Since then Navitas has been tracking sideways with a market capitalization of $1.9 billion. Given the growth of this companies revenue and net profit the past few years, this company may still be in a growth phase, but priced like a mature company.

Qantas (QAN) has seen sentiment return in a big way today, with a share price gain of 4.87%. With the Australian market falling during the flying kangaroo's recent rise, the market took profits the past few days to re-invest across other stocks. Now the breath has been taken, the national flag carrier is poised for another jump. Watch for Qantas to break above $1.83 and hold. Once done, another 18c or 10% will see its price pop to the magic $2 mark.

Of the small number of falling shares today, Arrium (ARI) lead the slide with a simple half cent fall – equal to 2% and closing at $0.245. Arrium CEO has outwardly announced that the mining and materials company is looking at any means possible to cut its crippling $2.358 billion debt (38% of company capital). Market Analysts see that a 50% sale in their mining consumables could make as much as $950 million and contribute to getting a better grip on the present.

The Aussie dollar slid to a fresh four-year low by breaking through the previous low of 0.8539 in overnight trading in New York. The currency was hammered by Reserve Bank of Australia deputy governor Philip Lowe’s comments on its value and another slide in the price of iron ore. The next support level is at 0.8500, which is expected to be tested tonight as the downside momentum continues.

The SPI has a strong session with gains across the board despite another slump in the iron ore price and a flat session on Wall Street. The SPI looked strong from the open lifting more than 50 points in the first hour and also managed to close near the intraday high above 5,400. The next resistance level is at 5,428, which is 50% Fibonacci retracement level.

Today’s rally is a sign of further strength to come, although recent selloff in copper and crude oil need to be taken into account, as further weakness of these may restrict the SPI from rising.


– Edited by Robert Ryan

Australian Market Wrap is compiled by the Sydney trading desk at Saxo Capital Markets.




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