Record 12-Day Long Rally in Australian Stocks

Marcus Jacob
06 Feb, 2015
New York City

Reserve Bank of Australia offered positive outlook for economic growth but also said jobless rate is likely to peak at 6.5%. Stocks extended gains for the 12th session in a row and dividend yield stocks were in favor.

[R]5:30 PM Sydney – Reserve Bank of Australia offered positive outlook for economic growth but also said jobless rate is likely to peak at 6.5%. Stocks extended gains for the 12th session in a row and dividend yield stocks were in favor.[/R]

Australian stocks extended gains in the twelfth session in a row and dividend yields were in focus. Investors were positive after the latest positive economic assessment from the RBA.

Several banking and real estate stocks are yielding close to 5%, attractive yield for investors when cash rates are hovering near 2.2% and are expected to go lower.

Investors, domestic and international, piled into real estate and dividend paying stocks after the latest unexpected rate cut this week.

Reserve Bank of Australia sounded positive in the economic outlook released today but also estimated unemployment rate to peak at 6.5%. The report also raised expectations that the record low interest rates may fall below 2%.

Australian dollar closed at 77.79 U.S. cents and in stock-trading turnover slipped to 714 million shares worth $5 billion.

ASX 200 Index rose 9.20 or 0.2% to 5,820.20 and broader All Ordinaries Index added 9.20 to 5,774.70. For the week, ASX 200 soared 4.1%.

In commodities trading, gold fell US$4 to US$1,267 an ounce and light crude oil jumped $2.03 to US$50.48 a barrel.

Brent crude jumped $2.08 to close at US$58.65 a barrel.

Australian Stock Movers

Arrium Ltd plunged 6.7% to 21 cents after the mining company divested its wire ropes business to Belgium-based Bekaert for about $90 million and use proceeds to reduce the debt.

The transaction is expected to close at the end of the first-quarter.

News Corp jumped 2.6% to $19.75 after the diversified media and pay-television service provider reported total revenues in the second-quarter ending in December rose 2% to $2.28 billion from $2.24 billion a year ago period.

Net income in the quarter dropped 5.3% to $142 million compared to $150 million and diluted earnings per share decreased to 24 cents from 26 cents in the same period a year ago.

The company said revenues from newspaper segment in Australia fell 8% and advertising revenue in Australia dropped 3%.

Total advertising revenues plunged 9% and revenues from circulation and subscription business slid 3%.

Energy Resources of Australia Limited gained 1.8% to $1.38 after the uranium producer reported revenues in the year ending in December climbed 7% to $378.96 million from $355.87 million a year ago period.

Net loss in the year widened to $187.80 million compared to $135.83 million and loss per share increased to 36.3 cents from 26.2 cents in the same period a year ago.

Virgin Australia Holdings Ltd rose 2.3% to 45.5 cents after the airline company said underlying pre-tax profit in the second quarter ending in December of $55.3 million compared to $47.6 million a year ago period.

The airline company reported total revenues in the quarter increased 1.5% to $5.25 billion from $5.17 billion and profit-after-tax of about $11.3 million a year ago period.