RTTNews - Despite mixed cues from Wall Street where stocks ended on a subdued note on Friday, the Australian market opened higher on Monday, with key bank stocks posting strong gains. However, with investors turning cautious and going in for some profit taking in stocks from other sectors, the market has given up some of the gains and is trading just modestly higher at present.
Energy, materials, healthcare and consumer staples stocks are mostly trading lower, while technology and industrial stocks are exhibiting a mixed trend.
The Australian benchmark index S&P/ASX 200, which rose to 4,265.9 in early trading, is currently up by 8 points or 0.2% at 4,252. The broader All Ordinaries index is trading at 4,257.1, up 7.6 points or 0.2% over its previous close.
On Friday, the S&P/ASX 200 index head ended at 4,244 with a gain of 53.6 points or 1.28% and the All Ordinaries index had closed up 53.60 points or 1.28% at 4,250.
Among key bank stocks, ANZ Bank is up nearly 4%, Commonwealth Bank of Australia is trading 2.6% up, National Australia Bank is gaining 3.7% and Westpac Banking Corporation is trading higher by about 2.5%. Diversified financial stock Macquarie Group is up by nearly 1%.
Among materials stocks, BHP Billiton, Rio Tinto and Orica are trading weak, while Newcrest Mining, Fortescue Metals and Bluescope Steel are trading in positive territory. Energy stocks Woodside Petroleum, Oil Search, Santos and Origin Energy are trading weak.
Shares of GrainCorp Ltd are up by nearly 6% following an earnings upgrade by the company. The company has upgraded its full-year profit guidance by up to 50% following increased demand from new bulk wheat exporters. The company said it expects a net profit for the year ending September 30 between A$53 million and A$63 million, up from earlier guidance of a profit between A$37 million and A$42 million.
GrainCorp reported net loss of A$19.94 million in fiscal 2008, due to drought conditions in Queensland, New South Wales and Victoria. The new guidance released on Monday was second upgrade in GrainCorp's earnings outlook since it forecast a profit between A$23 million and A$28 million in February.
In economic news, the Australian Industry Group and PricewaterhouseCoopers release their Australian Performance of Manufacturing Index for July, and the Reserve Bank of Australia releases its index of commodity prices for June.
In the currency market, boosted by encouraging U.S. growth figures, the Australian dollar opened higher today and recorded its strongest start since late September 2008. In early trading, the Aussie was quoting at $US0.8356/60, up from Friday's close of US$0.8278/80. The Australian dollar is currently trading at 0.8364 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Japan and Korea are trading flat. The New Zealand market is trading modestly higher, while Singapore is trading in negative territory. Stock markets across the Asia-Pacific region finished largely on the upside on Friday, with Hong Kong's Hang Seng index and Japan's benchmark Nikkei index posting gains of 1.7% and 1.9% respectively.
On Friday, Wall Street ended on a mixed note. While the Dow ended up by 17.15 points or 0.2% at 9,171.61, the tech-heavy Nasdaq drifted down by 5.80 points or 0.3% to 1,978.50. The S&P 500 rose 0.73 points or 0.1% to 987.48.
The GDP report from the commerce department revealed that the U.S. economy continued to shrink by a slower than expected margin, but trader sentiment was hit to an extent as consumer consumption came in far lower than expected.
According to the data, gross domestic product fell at a pace of 1% for the second quarter after economists had expected GDP to fall at a rate of 1.5%. Personal consumption figure showed a decrease of 1.2%, significantly more than what economists had been expecting.
Major European markets closed modestly lower, with the U.K.'s FTSE 100 index and the German DAX index both finishing down by 0.5%, while the French CAC 40 index dipped by 0.3%.
Crude oil turned sharply higher again on Friday and closed at a four-week high. A better-than-expected U.S. gross domestic product report boosted the outlook for energy demand. Light sweet crude for September delivery surged to US$69.45, up US$2.51 on the session. Prices touched as high as US$69.74 after earlier hitting a low of US$64.96.
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