RTTNews - The Australian stock market ended in positive territory on Friday, led by mining stocks after Rio Tinto scrapped its proposed deal with Aluminum Corp. of China, or Chinalco, and in turn, entered into a joint venture deal with rival BHP Billiton to develop a major iron-ore project in Western Australia, which will result in cost synergies in excess of $10 billion for the two companies. A positive closing on Wall Street and higher oil prices, which rose to a seven-month high in New York, also lifted sentiment.
In the U.S., traders digested the initial jobless claims for the week ended 30th May, which fell to 621,000 from the previous week's revised figure of 625,000. Economists had been expecting jobless claims to edge down to 620,000 from the 623,000 originally reported for the previous week. The report also showed that continuing claims fell to 6.735 million in the week ended May 23rd from the preceding week's revised level of 6.750 million.
In a separate report, the Labor Department revised its labor productivity figures for the first quarter, revealing a mild increase in the pace of growth. The report also showed that unit labor costs increased by less than previously estimated.
The Dow climbed 74.96 points or 0.9% to 8,750, the Nasdaq finished up 24.10 points or 1.3% at 1,850 and the S&P 500 closed up 10.70 points or 1.1% at 942.
The All Ordinaries Index opened at 3,933, unchanged from its previous close, and advanced higher, led by mining stocks on higher commodity prices and the announcement concerning Rio Tinto-BHP Billiton joint venture project. The market held on to the gains amid strength in the metals space and moved sideways for the rest of the trading session ahead of the release of the key non-farm payrolls report in the U.S. The index ended up at 3,969, representing a gain of 36.50 points or 0.93%. The benchmark S&P/ASX 200 Index followed a similar trend and ended higher at 3,971, a gain of 36.60 points or 0.93%.
On the economic front, survey results released by Australian Industry Group revealed that activity in the construction sector improved in May, although the sector remained in the contraction zone.. The AiG's Performance of Construction Index for May came in at 46.9, an increase of 10.4 points over April's reading.
Crude oil prices continued its northward march and ended higher with a gain of 54 cents at $69.35 a barrel in Asian trading. Light sweet crude for July delivery closed sharply higher at $68.81 on the New York Mercantile Exchange on Thursday on hopes of increasing demand.
Rio Tinto surged 8.36% and BHP Billiton advanced 8.74% after Rio Tinto announced that it has scrapped its deal with Aluminum Corp of China, or Chinalco. The company, in turn, entered into a joint venture with rival BHP Billiton to develop the Pilibara iron-ore project in Western Australia. BHP Billiton, in a separate statement, announced that it would invest $5.8 billion in the 50:50 joint venture project, and the two companies are likely to save more than $10 billion by combining their two iron-assets in the region.
Among others in the metal space, Fortesque Metals soared more than 13.5% following its announcement that it has signed a joint venture agreement with BC Iron for the development of a project in the Pilibara region in Western Australia.
Oil stocks were mixed. While Santos gained 3.66% and Oil Search advanced 3.09% on higher crude oil prices, Woodside Petroleum bucked the trend and ended lower by 1.34%.
Banking stocks ended lower. Commonwealth Bank edged down 0.76%, National Australia Bank lost 1.17% and ANZ Bank fell 3.21%. However, Westpac Banking bucked the trend and ended higher with a gain of 0.47%.
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