Australian shares rallied on Thursday after a day of significant announcements that saw the banks and some tech companies post gains that gave the local market a notable boost.
The S&P/ASX 200 Index advanced 66.4 points, or 1 per cent, to 6726.6, after National Australia Bank surprised the market by announcing its full-year results without a capital raise.
“It’s very stock-specific stuff going on today,” said Atlas Funds Management chief investment officer Hugh Dive.
“I’m not going to read into this as the start of any particular rally — I think you could find a different move tomorrow.”
NAB shares rose despitethe bank announcing a full-year net profit of $4.8 billion, down 13.6 per cent on 2018 and slightly below already low market expectations.
But after Westpac announced a $2 billion institutional raise last week, it was widely expected NAB would do the same.
When the bank did not, hedge funds who had taken a short position with a view to buy discounted NAB shares in a new raise were forced to re-enter the market to cover their positions, according to Mr Dive.
The big four banks took the top four spots for market movers by value, collectively adding almost to $1 billion.
NAB added 2.23 per cent to close at $28.42, Westpac climbed 0.73 per cent to finish the day at $27.45, the Commonwealth Bank rose 1.33 per cent to $79.04, and ANZ ended the day up 0.42 per cent at $26.11.
Tech leads sector gains
The tech sector climbed the most on percentage terms. Zip Co surging after announcing it had signed an agreement with Amazon. The deal will see Zip’s point-of-sale credit payment option offered to customers shopping on Amazon.com.au.
As part of the deal, Zip will issue rights to $68.7 million in shares to Amazon, with the offering scheduled to go live on the e-commerce site from Thursday.
The news sent shares in the company spiking as high as 30 per cent before ending the day at $4.02, up 16.86 per cent.
Xero also led the IT sector higher on Thursday. The cloud-based accounting software provider rose 9.56 per cent to close at $73.95after the company released its first-half results.
In addition to revenue of $NZ338.7 million ($313.4 million), up 32 per cent on the prior half year, the company reported a 30 per cent lift in subscriber numbers compared to the same period last year.
The S&P/ASX 200 Information Technology Index has lost more than 5 per cent since the middle of last month when concerns about valuations in the sector came to a headfollowing a hedge fund’s critique of WiseTech.
However, Thursday’s gains from Xero and Zip saw the sector reclaim some of that lost ground, with the IT index up 3.27 per cent on the day.
James Hardie was alsoa strong performer during the session following release of its half-year results.
The building products manufacturer reported a net profit after tax of $US189.6 million ($276 million), up 18 per cent on the previous first half.
The result saw the company raise its full-year profit guidance to between $US340 million and $US370 million ($495 million and $539 million) for the year ended March 31, 2020.
Shares in the company finished the day at $2.52, or 7.77 per cent above its previous close.
Flight Centre lost ground on Thursday after the company released its half-year results and gave an outlook update that fell below expectations. Its shares closed down 5.47 per cent at $40.07.
The only sector to finish the day in the red was energy, dragged down by a fall in oil prices overnight on Wednesday AEDT.
S&P/ASX 200 Energy Index fell 0.72 per cent to 11,056.4 points, with Beach Energy dropping 2 per cent to $2.36, Oil Search shedding 1.1 per cent to close at $7.34 and Santos losing 1.5 per cent to finish at $7.99.
The price of oil fell by up to 2 per cent after higher than expected crude oil inventory levels were reported.
Local investors seemed unperturbed by the incremental developments on the United States-China trade deal, noting the sharemarket gains on Thursday.
Hopes of an interim deal between the US and China waned after a senior White House official told Reuters an opportunity for the leaders to meet and sign any agreement was unlikely this month. It had been hoped a deal would be signed in the next couple of weeks.
Despite the trade war concerns, Australia’s current account balance data released on Thursday surpassed expectations and showed exports in September had increased.
The trade surplus rose to $7.2 billion in September, far above the $5.1 billion expected by the market. The result was partly because of a rise in liquefied natural gas exports.
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