The local share market drifted higher, following new record highs on Wall Street, with local gains led by the miners, while Goodman Fielder was punished hard for its profit downgrade.
Higher commodity prices, easing concerns about Chinese growth and a strong lead from Wall Street combined to push the Australian share market higher on Wednesday.
The benchmark S&P/ASX200 added 14.1 points, or 0.3 per cent, to 5403.3, closing well below its intraday high. The broader All Ordinaries gained 13.9 points, or 0.3 per cent, to 5408.8.
The gains followed on from a strong performance from Wall Street overnight on Tuesday, which saw the S&P500 jump 0.7 per cent, while the Nasdaq surged 1.6 per cent.
While Wall Street basked in new all-time highs of the S&P500, the ASX200 remains well below its records. Local gains remained limited in comparison due to the fact that there was more potential for earnings growth in the recovering US economy, JBWere executive director Mike Kendall said.
“Particularly as the winter thaw takes hold, you’re likely to see factories bounce back much more sharply, which gives potential for much better profitability, given consumers are in the store shopping,” Mr Kendall said.
“Given that local corporate reporting season is past us, investors have got to wait another six months before we see the next one. I suspect people are going to be fairly reluctant to be too aggressive without very certain leads in the domestic market.”
With corporate news slim, Australian investors will be waiting on more economic data, the looming federal budget and the upcoming US reporting season for leads.
“Sometimes markets just drift sideways in the absence of news. I think that’s probably what we’re doing to some extent,” Auscap Asset Management principal Tim Carleton said.
“I think people are assessing where they’re at and focusing on the individual stocks in their portfolio at the moment.”
Goodman Fielder shares plummeted 22.1 per cent to 45.5¢ following a profit warning from the wholesale food manufacturer and supplier. The company expects full-year profit to come in up to $27 million lower than analyst forecasts of $180 million. Goodman Fielder warned that it expected to write-down some of its assets, with a close eye on its baking and grocery divisions.
Miners were big drivers in the market on Wednesday, with the materials sub-index pushing 0.7 per cent higher.
They were boosted by a further rise in the iron ore price, which saw the metal return above the level it was before March’s ‘flash crash’ which saw it fall more than 8 per cent in one day. Iron ore is now sitting at $US117.60 per tonne.
Following reports of a $20 billion demerger plan, BHP Billiton shares lifted 0.9 per cent to $37.37. It is understood that investment bank Goldman Sachs is working on a number of strategic options for the miner. Rival Rio Tinto finished 0.4 per cent higher at $64.40, while Fortescue Metals jumped 2.8 per cent to $5.46.
Increasing animosity between the free-to-air networks and its pay-TV rivals over who will broadcast Australia’s major sports has led to the FTA industry body accusing pay TV of attempting take key broadcasts “by stealth” and lobbying policymakers to change anti-siphoning laws.
Shares in broadcaster Nine Entertainment dropped 2.1 per cent to $2.32 , while Seven West Media gained 0.8 per cent to $1.96.
Maurice Blackburn Lawyers is considering a class action against QBE Insurance Group, just two months after Slater & Gordon explored the same thing over the insurers huge profit downgrade, but moved away after finding no evidence. QBE shares were largely unaffected, adding 0.5 per cent to finish at $12.80.
Shares in Leighton Holdings slipped 0.2 per cent to $20.85 following the appointment of a new chief financial officer three weeks after the ousting of the construction group’s top executives.
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