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Australia: Shares rally on Bank of England easing, NZ little changed

Friday, August 5, 2016 - 12:17
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[SYDNEY] Australian shares rose on Friday, driven by commodity prices and as an aggressive easing package announced overnight by the Bank of England stokes global risk appetite.

The S&P/ASX 200 index rose 21.5 points, or 0.4 per cent, to 5,497.5 points by 0330 GMT.

"It's really the latest central bank stimulus, this time from the Bank of England overnight," said David Walker, senior equities analyst at fund manager Clime Asset Management.

"Since Brexit, markets have been buoyed mainly by large, coordinated central bank stimulus...markets love this, this has driven markets higher despite very little earnings growth."

Australia's bourse has rallied 7.54 per cent since the Brexit vote. However, this week it backed away from a one-year high, falling 1.1 per cent.

On Friday the mining sector, which comprises a fifth of the index, made solid gains.

Fortescue Metals Group stock added 4.1 per cent. Several brokers raised their target price for Fortescue last week, after the miner said it had reduced production costs. Fellow iron-ore majors posted gains, with BHP Billiton Ltd adding 3 per cent and Rio Tinto up 1.5 per cent.

Gold stocks also rose, as the precious metal held on to gains made earlier in the week.

Newcrest Mining Ltd shares were up 1.5 per cent and Evolution Mining Ltd rose 2 percent.

Other major movers included Downer EDI, which was up as much as 4.7 per cent after Deutsche Bank raised its target price for the stock. Tabcorp stocks rose 3.8 per cent after Morningstar lifted its rating on the gaming stock.

Virgin Australia Holdings Ltd added 2 per cent, after Singapore Airlines said it had increased its shareholding in the carrier and it released results. Virgin said last week it lost A$224.7 million for the year to June 30.

New Zealand's benchmark S&P/NZX 50 index edged marginally higher on Friday. It rose 9 points, or 0.1 per cent, to 7,307.02 points. Low volumes traded as investors waited for company earnings season kicking off next week.

The index was poised for a weekly loss of 0.74 per cent, after five consecutive weeks of gains.

Retirement village operator Summerset led losses, down 1 per cent, while Auckland Airport lost 0.7 per cent.

Outdoor equipment retailer Kathmandu lost 0.5 per cent after the company rose as much as 6.4 per cent in the previous session on higher earnings guidance.

Air New Zealand led gains, rising 0.9 per cent while rubber goods manufacturer Skellerup rose 0.7 per cent.

REUTERS