Australian shares advance 0.5% over the week
Australian shares edged higher for the week after a jump in oil prices helped the market overcome some of the nerves and heavy selling that characterised the start of 2016.
The benchmark S&P/ASX 200 index closed the week 0.5% ahead at 4916.0, including a gain of 1.1% on Friday.
“This whole week has been dominated by economic growth concerns and falling oil prices,” said Tom Piotrowski, market analyst at CommSec.
He said the market’s turnaround on Friday followed a jump in oil prices, including a 6% leap in the price of benchmark Brent crude, and comments by European Central Bank president Mario Draghi suggesting scope for further measures to stimulate the economy, such as buying bonds and lower interest rates.
“That just highlights how significant the conversation about slowing growth has been, that the ECB president talking about more stimulus has been the main catalyst [for financial market gains],” Piotrowski said.
Energy sector leads gains
Energy shares led sector gains, with the S&P/ASX 200 energy sector index up 3.8% on Friday at 6996.70, trimming its losses to 3.91% for the week.
“It was more sentiment driven than based on fact because oil inventories remain at elevated levels and the supply side of things still remains a crucial factor,” Piotrowski said.
Santos (ASX: STO) shares climbed 9.8% on Friday to $2.81, leaving it 1.7% lower for the week and 23.4% so far in calendar 2016.
Woodside (ASX: WPL) advanced 1.8% to $25.45, leaving it 5.7% down for the week and 11.4% lower so far this year. Origin Energy (ASX: ORG) added 4.1% on Friday to $3.84, making for a drop of 5.7% this past week and 18.7% so far in January.
All three companies updated the market this past week on debt levels and strategies for coping with an oil price that has fallen more than 70% over the past 18 months.
In addition, Woodside flagged a US$1.2bn writedown owing to the sharply lower oil price.
BHP Billiton (ASX: BHP) ended 7.5% higher at $15.26, lifting the mining and energy giant 1.3% for the week.
It remains 14.6% lower so far this year, including declines following a US$4.9bn writedown of its US oil and gas assets.
The resources sector index climbed 4.6% on Friday, leaving it virtually flat over the week and 11.4% lower in January.
Rio Tinto (ASX: RIO) was 3.4% ahead at $39.65, steady for the week and 11.3% down so far in 2016. Earlier this week, it said its fourth-quarter iron ore shipments rose 11% from the same period a year earlier.
Bank stocks end the week lower
Jitters over major banks led the financial sector lower, with the S&P/ASX 200 financials index down 1.7% over week at 5691.10, including a gain of 0.5% on Friday. The sector has given up nearly 10% in January.
“Part of the reason for that is the markets were worried about their exposure to the resources sector, be it through loans or the slowdown in the Asian economy,” Piotrowski said. “The ANZ has the greatest exposure on that front.”
ANZ Bank (ASX: ANZ) led losses among major banks for the week, shedding 6.1% to $23.35, including a 1% gain on Friday.