Australian shares advance 4% over the week
Australian shares rebounded from a steep drop on Monday, climbing nearly 4% over the week as bargain hunters sought out blue chips at attractive prices.
Australia’s benchmark S&P/ASX 200 index rose 196.2 points, or 3.9%, to 5256.10. The weekly gain occurred despite a virtually flat showing on Friday as the index edged 13.5 points, or 0.3%, ahead.
“It’s one of the better weeks we’ve had so far this year,” said CommSec market analyst Steve Daghlian.
The key stocks gauge fell nearly 1% on Monday, touching a six-week low, after shedding 1.3% the previous Friday.
“Buyers thought the market had been sold off enough over the past month or so, and it was a good time to get in so we’ve seen substantial improvements over the past four days.
“Tuesday was the third best day of the year and Thursday was the fourth best day of the year,” he said.
In addition, US Federal Reserve officials continued to comment on the likelihood of an interest rate rise in December, helping investors overcome a major source of uncertainty.
Banks and resources lead market higher
Financial, energy and resources sectors led gains after sharp declines a week earlier attracted investors in search of value.
“All three of the those sectors have done very well and that’s lifted the rest of the market,” Daghlian said.
The nation’s major banks led the financial sector index 4.6% higher over the week. National Australia Bank (ASX: NAB) topped the sector’s weekly percentage gains, adding $1.61, or 5.7%, to $29.96.
Commonwealth Bank of Australia (ASX: CBA) advanced $4, or 5.3%, over the week to $79.83. Australia and New Zealand Banking Group (ASX: ANZ) added $1.43, or 5.4%, over the week to $27.44. Westpac Banking Corp (ASX: WBC) gained $1.26, or 4.1%, over the week to $31.86.
The S&P/ASX 200 resources index rose 3.2% over the week led by sector and market heavyweight BHP Billiton (ASX: BHP), despite sharply weaker iron ore prices.
BHP Billiton rose 1.2% over the week to $20.48 after diving 11.5% last week on the back of the Samarco dam disaster in Brazil.
Rio Tinto (ASX: RIO) edged 0.3% lower over the week to $48.51 and Fortescue Metals Group (ASX: FMG) slid 8.8% over the week, including a drop of 4.2% on Friday to $2.08.
Fortescue is Australia’s third largest iron ore miner but is a higher cost producer than BHP or Rio so recent sharp declines in the market price of the commodity can hit its bottom line harder.
In addition, its iron ore tends to have a higher moisture content than that of its larger rivals which fetches a lower market price.
The S&P/ASX 200 energy index climbed 6.6% over the week as geopolitical concerns sent oil prices higher.
Woodside Petroleum (ASX: WPL) gained 5.3% over the week to $30 and Santos (ASX: STO) rose 4.4% over the week to $4.14, although it shed 4.4% on Friday.
Origin Energy (ASX: ORG) powered 15.8% ahead over the week to $5.48.
Elsewhere, Lend Lease (ASX: LLC) rose 4.5% to $12.63. Late last week the property developer said it was expanding into international markets to diversify its earnings stream.
However, James Hardie Industries (ASX: JHX) shed 2.9% over the week to $16.69 after the building products company downgraded its full-year profit guidance.