ASX Update: Share Market Gains Led By Big Banks

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The Australian share market rose 1.1% today in early trade. The ASX 200 bucked trends in overseas markets, rising 60 points to 5,363. It was much the same story on the All Ordinaries. The index rose 57 points to 5366 by 11am AEST.

The big banks led the gains on the ASX. But mining stocks weren’t far behind. The sector is up despite ongoing concerns about weakening commodity prices.

Let’s take a quick look at the big mining stocks today.

BHP Billiton [ASX:BHP] shares rose 1.16% to $25.31.

Rio Tinto [ASX:RIO] is trailing lower, up 1.01% to $51.12 a share. Fortescue [ASX:FMG] is down for the day. Its stock fell 2.39% to $1.94 a share.

Australia’s biggest oil exporter is enjoying a solid start too. Woodside Petroleum [ASX:WPL] is up 1.93% to $32.67 a share.

Investors rewarded Woodside after the company posted profits of US$679 million. Half-yearly profits fell by 39%, but it didn’t worry investors. It sprung no surprises, matching market expectations.

What’s not welcome is the news that dividend yields fell. Last year, Woodside paid out US$1.11 dividends per share. But today it announced interim dividends of US$0.66 per share. Despite that, investors are sticking by the oil producer.

Elsewhere, the banking sector was the big winner. It drove much of the ASX’s gains this morning.

NAB [ASX:NAB] rose 2.33% to $32.50.

Commonwealth Bank [ASX:CBA] is up 2.13%, trading at $78.55 a share.

Meanwhile, NAB [ASX:NAB] share prices rose 2.36% to $32.51. Westpac [ASX:WBC] saw the biggest gains of all, up 2.87% to $32.57 a share.

Winners and losers on the ASX

Let’s take a look at the best, and worst, performer from this morning.

The Reject Shop [ASX:TRS] saw the biggest gains. It was up 12.11% to $7.13 a share. Full-year net profits fell by 1.9% to $14.2 million. On the upside, sales were up 6.4% to $756.8 million. The share price is up because its earnings matched market expectations.

On the other end of the scale, SEEK [ASX:SEK] struggled badly. By far the biggest loser, its share shed 10.09% this morning.

The company did post full-year profits of $189.8 million. And revenues were up 20% for the year. But it wasn’t enough to impress investors. The 10% drop left shares trading at $12.41 apiece.

Looking beyond the ASX

In overseas markets, the US-based S&P500 fell 0.3% overnight. It came on the back of concerns about China’s ongoing economic slowdown.

Not even positive home construction figures helped stocks. Construction jumped to its highest level in eight years in July. But it wasn’t enough to prevent the markets sliding.

One of the big losers on US markets was copper producer Freeport [NYSE:FXC]. Freeport was down 3.12% overnight, amid falling copper prices. Its shares are trading at US$9.92 apiece.

In other major market news, China had a rocky day yesterday. The Shanghai Composite Index plunged 6.2%. It’s down 27% since the start of June.

The signs show that China’s wealthiest investors are spooked. Trading accounts, holding more than $2.18 million worth of shares, fell by 28% in July. At the same time, accounts with $20,000 rose by 8% in the same month. That’s concerning because it shows the big investors are losing faith.

You can’t blame them though.

They have little reason to stick with Chinese stocks at the moment. Earnings are flat, and the P/E ratio ranks among the highest in the world. With a fragile economy, the future of Chinese stock markets is shaky.

Unfortunately, those same problems hit closer to home. What does the future hold for the ASX? The Daily Reckoning’s Vern Gowdie believes the ASX is heading for a catastrophic crash.

Vern is the award-winning Founder of the Gowdie Family Wealth advisory service. He’s ranked as one of the Australia’s Top 50 financial planners. And he thinks the ASX could lose as much as 90% of its $1.8 trillion value.

That’s why Vern’s written ‘Five Fatal Stocks You Must Sell Now’. In this free report, Vern wants to help you avoid the coming wealth destruction. He’ll show you which five blue chip Aussie companies could destroy your wealth. And you almost certainly own one of them. To find out how to download the report, click here.

 

Mat Spasic,

Contributor, The Daily Reckoning

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