Investors looked to be enjoying an early Santa rally this week, with the local market leaping to its highest since late August on the back of soaring commodity prices and continuing Trump euphoria that sent Wall Street to fresh all-time highs.
Energy stocks lifted the bourse higher on Friday, followed closely by real estate stocks and the banks, while consumer discretionaries, healthcare and the miners were moderate drags.
The benchmark S&P;/ASX 200 Index and the broader All Ordinaries Index each rose 0.3 per cent to 5560.6 points and 5615.8 points respectively on Friday. Over the week both the ASX 200 and the All Ordinaries added 2.1 per cent.
"Financial market participants continue to project and discern what a Trump presidency means for inflation and growth," said Gareth Aird, senior economist at Commonwealth Bank of Australia. "As a result, the rise in bonds yields has been accompanied by a lift in volatility. We expect this to be the new norm over the coming year, particularly as divergent monetary policy remains in play."
The resource giants BHP Billiton and Rio Tinto had a fairly solid week, thanks to a roaring iron ore price and gave the bourse some solid support. On Friday though, BHP closed down 0.4 per cent whereas Rio Tinto managed to close up 0.3 per cent.
Oil was hovering around $US53 a barrel on Friday, ahead of talks beginning Saturday in Vienna between OPEC and 14 other oil-producing nations to straighten out the supply levels and discuss OPEC's decision to cap production. Australia's largest oil producer Woodside Petroleum finished up 2.4 per cent for the day.
There was plenty of equities news around on Friday to keep market watchers busy. Shares in liver cancer treatment company Sirtex plunged 37.2 per cent to $16 after the company shocked with a profit downgrade just six weeks after an optimistic AGM.
Crown Resorts shares also took a belting after reports emerged the Monetary Authority of Macau will halve the amount of cash UnionPay card holders can withdraw from ATM machines. Investors sent the share price tumbling 5.3 per cent on fears the lack of cash may cause a severe dent in revenue.
DUET Group was the best performer this week, following news that Hong Kong's Cheung Kong Infrastructure tabled a conditional and unsolicited offer of $3.00 per share for the company, valuing it at approximately $7.3 billion. The stock rocketed higher and finished the week up 18.7 per cent at $2.79.
Stock Watch - Bellamy's
Shares in former market-darling Bellamy's failed to claw back the steep losses it suffered following the news of new regulations that may restrict the sale of baby formula products in China. The company put out an announcement on Thursday in response to an ASX query, saying the company revealed information about poor sales in China as soon as possible. Shares clawed back 2.8 per cent after the announcement, but investors are far from convinced. The stock is still down almost 45 per cent following last Friday's announcement. Bellamy's relies heavily on Chinese demand for infant formula, however in an unorthodox way, where Chinese customers would buy Bellamy's products from Coles, Woolworths and other Australian stores and transport them to China. However the new regulations there may restrict other infant formula firms from distributing there, which saw them flood the market with their product. This hit Bellamy's sales considerably.
Market movers
Big banks
About one-third of the market's overall rise this week came courtesy of the big four banks, which extended the phenomenal rally they've been on since the US election. ANZ spearheaded the rally, rising more than 5 per cent over the week to within a whisker of $30, its highest since July last year. Gains in the other three were solid but less spectacular, with CBA up 2.6 per cent to bounce back above $80, Westpac gained 3 per cent to $32.28 and NAB added 2.1 per cent to $29.69.
Europe
Investors were eyeing Europe this week. Italians overwhelmingly voted 'no' in a referendum on constitutional reform championed by Prime Minister Matteo Renzi. The euro dropped sharply on the news against the US dollar and investors feared a slump in the shares of Italian banks, but markets quickly stabilised as the outcome had been expected and the damage looked containable. The euro dropped again after the ECB surprised markets by extending its asset purchasing program by nine months to December 2017 while cutting the amount of monthly purchases by 20 billion euro to 60 billon euro.
Australian dollar
The Aussie dollar hit a three-week high of US75.08¢ on Thursday after Chinese data showed continued positive demand for Australian commodity exports. The local currency largely ignored weaker than expected third-quarter GDP numbers, which showed the economy contracted or the first time in five years, instead finding support in resurging commodity prices. However some experts argue the US dollar will continue to strengthen on the back of Donald Trump's election win, which will place a modest downward pressure on the Australian dollar. The local unit was fetching $US74.65 on Friday afternoon.
Oil and gas
It was a big week for Origin Energy and Santos, with both businesses announcing the unspooling of their non-essential assets. On Tuesday, Origin Energy announced it intends to float its upstream oil and gas business and list it on the ASX. Rival Santos announced on Thursday it would create a separate business for its non-core portfolio. Investors initially sold off Origin shares but over the rest of the week they've clawed their way back to $6.55. Santos shares have drifted slightly lower since the announcement and finished the week down 1.6 per cent.