Australian shares end week 0.8% lower.
A firmer tone on Friday helped claw back some of the losses racked up by Australian shares earlier in the week, following Wednesday and Thursday’s dives off the back of China’s market rout and Greek debt concerns.
“The local share market has had a reasonable recovery today on hopes that the Greeks and the Europeans have found some middle ground,” said CommSec analyst Tom Piotrowski.
Piotrowski said the more conciliatory discourse between Greece and its creditors and a number of other positives had helped support the market on Friday.
“We’re also seeing a recovery on the Chinese stock market and if you combine that with the improvement we saw in commodity prices in the last day, that’s all helped our market put together a reasonable improvement.”
Australia’s benchmark S&P/ASX 200 index ended Friday at 5,492 points – down 0.84% from a finish of 5533.9 a week earlier, although Friday’s trade saw a 21 point gain.
Commodity prices spark volatile week for miners
Improved commodity prices helped lift mining heavyweights, including BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) on Friday.
BHP was 81 cents, or 3%, higher at $26.67 in late trade on Friday, recouping sharp losses earlier in the week on the back of a steep decline in iron ore prices.
“Iron ore prices have been particularly volatile in response to stockpiles at Chinese ports,” Piotrowski said.
“In the last day, though, we’ve seen prices improve by about 8% and that’s part of the reason why mining stocks are doing better today.”
Iron ore for immediate delivery to China climbed nearly 9% overnight to US$48.30 per tonne. Although a sharp improvement from levels earlier in the week, it remains near the 10-year low of US$44.10 a tonne reached on Wednesday.
Energy stocks also finished the week lower, with the sector losing 3.02% over the past five days on the back of a jumpy oil price.
ASX down 2% on Wednesday
Australian shares were hardest hit on Wednesday with the ASX 200 losing 2% to finish at 5,469.5 as a 6% drop in the Shanghai Composite took a toll on local sentiment.
At one point half of China’s listed stocks were suspended from trading. Most of those that did trade hit their 10% “limit down” immediately after open. This rule limits the amount a share price is allowed to rise or fall to 10% per day.
This can be a challenge for investors with margin loans who need to close their positions.
Thursday, however, saw a turnaround with Chinese stocks rebounding nearly 6% following a move by Chinese officials to ban companies’ major shareholders from selling shares for six months.