Banks Lead Sydney Stocks Rally on U.S. Rate Hike

Marcus Jacob
17 Dec, 2015
New York City

ASX 200 index jumped 1.5% after the widely anticipated increase in the U.S. interest rates kicked in. Banks led the gainers. Caltex Australia said net profit before one-time items soared 29%.

[R]5:30 PM Sydney, Australia – ASX 200 index jumped 1.5% after the widely anticipated increase in the U.S. interest rates kicked in. Banks led the gainers. Caltex Australia said net profit before one-time items soared 29%.[/R]

Stock in Sydney rallied on Thursday as the U.S. Fed didn’t disappoint investors and raised the benchmark interest rate in the U.S. by 25 basis points, the first rate hike in nine years.

The Australian markets jumped following strong overnight gains the U.S. and Europe led by the big four banks advancing about 2%.

On the negative side, Slater & Gordon Limited tumbled 17.2% after the legal service provider lowered its guidance.

The Australian dollar jumped to 71.81 U.S. cents, while stock trading turnover increased to 1.2 billion shares worth $7.6 billion.

At the market close, the ASX 200 Index jumped 73.60 or 1.5% to 5,102 and the broader All Ordinaries Index advanced 71.90 to 5,150.60.

In commodities trading, gold added US$3 to US$1,067 an ounce and Brent crude future for immediate month delivery fell 29 cents to US$37.10 a barrel.

IPO

BuildingIQ Inc closed unchanged at $1 after the energy management software priced its stock at $1.

The energy management software company opened at $1.01 and closed at $1.

Megaport Limited soared 56% to $1.95 after the software-based connectivity provider priced its stock at $1.25.

The telecom company opened at $2.40 and closed at $1.95.

Australian Stock Movers

Caltex Australia Limited soared 5.9% to $36.50 after the convenience stores operator said its net profit, excluding one-time items, will increase 29% to between $615 million and $635 million in 2015 from the previous year.

The company said strong refining margins and operations, as well as an increase in marketing profits, contributed to the increase.

Net debt as of end of December is estimated at $420 million, compared to $715 million at June 30, and $639 million a year ago.

Sonic Healthcare Limited jumped 2.2% to $17.84 after medical diagnostic services provider said it will charge patients for tests that were previously free to compensate for the government funding cuts.

Earlier this week the Australian government unveiled plans to save $650 million over four years by cutting incentive payments for certain pathology and imaging tests.

Sonic said that the unexpected slash of laboratory and imaging services may impact its revenue by $50 million a year.

If it doesn’t start charging patients, the company forecasts a drop in EBITDA of at least 5% in 2016 and 2017.

CEO Colin Goldschmidt intends to launch a political campaign against the move.

""It creates a financial barrier to receiving medical services and discriminates against those who can''t afford services. It creates an incentive for patients to miss important tests or scans that can lead to a misdiagnosis or a delayed diagnosis,"" said Goldschmidt.

Slater & Gordon Limited tumbled again, this time by 17.2% to 89 cents, after the legal firm said there is “significant risk to miss 2015 earnings guidance” and lowered the outlook for U.K. segments in 2016.

The company warned that cash timing differences and problems in the U.K. will have an adverse effect on the gross operating cash flow for the six months ending December 2015.

Woodside Petroleum Limited fell 0.8% to $26.82 after the oil and gas producer said capital and exploration spending in 2015 will be $US170 million lower than previously estimated.

Production for 2015, will be slightly higher than the previous forecasted range between 91 million and 93 million barrels of oil equivalent.