Australian shares rose 3% over the week as investors were able to look beyond ructions in Greece and China and focus on matters closer to home.
Earlier this week, Greece and Europe agreed on a €86bn bailout package which would impose strict austerity conditions on the Mediterranean country, and Greece’s parliament adopted the package.
In addition, China’s share market stabilised following extended volatility.
As a result, Australia’s benchmark S&P/ASX 200 index climbed 172.7 points, or 3.2%, over the week to 5670.1 on Friday, bouncing back from its softer tone a week earlier.
“We had a bit of a relief rally because all the disaster scenarios weren’t actually true,” said Peter Warnes, head of equity research at Morningstar.
“That’s why the market is starting to focus more on things that matter.”
Warnes said the main index had returned to levels last seen in March.
“The market didn’t have to go down. It’s where it was a month and a half ago. The market is telling you all those things are transitory,” he said.
Consumer staples lead gains
The market ended the week higher across the board. Consumer staples led gains, rising 4.7% as investors renewed their affection for defensive assets such as supermarkets.
Market heavyweight Woolworths (ASX: WOW) advanced nearly 6% over the week to $28.50, a closing level last reached six weeks ago. Australia’s largest supermarket chain had been sold sharply lower on the back of sluggish sales and an underperforming hardware division.
Metcash, unloved of late, powered 10.4% ahead to $1.16 on Friday, making for a rise of 9.8% over the week.
Earlier on Friday, Metcash said it had hired former Coles supermarket executive Steven Cain to head its IGA supermarkets division. Analysts have credited Cain with the turnaround of the Asda supermarket chain in the UK.
However, Metcash shares remain nearly 38% lower so far in 2015. The grocery retailer and distributor has been ceding market share to German discount supermarket chain Aldi, as well as larger rivals Woolworths and Coles, which is owned by Wesfarmers (ASX: WES).
Wesfarmers added 5% over the week, closing on Friday at $41.75.
Miners’ gains subdued
The mining sector posted the most subdued gains, up 2.5% over the week.
BHP Billiton (ASX: BHP) advanced 1.5% over the five days to $27.10 despite telling the market it planned to write down its US shale oil assets by US$2.8bn.
Rio Tinto (ASX: RIO) shares rose 1.7% this past week to $53.01 as investors apparently looked beyond its lower annual production outlook for iron ore.