the asx 200 moves up just a shade in volatile directionless trading 1202752015

The Australian stock market moved up marginally but still faced the barrier from the 6,000 level on the S&P/ASX 200. It was a day marked by volatility and indecision as the market looked for direction but none came from the major sectors which were mostly mixed.

“The market is at fair value, so long as the following preconditions are met: the cash rate heads even lower and the Australian dollar doesn't rally from its current levels," George Boubouras, chief investment officer at Contango Fund Management, said, as quoted by the Sydney Morning Herald.

Indices and sectors

The benchmark S&P/ASX 200 on Tuesday gained 13 points, or 0.2 per cent, and closed at 5,969.1, while the broader All Ordinaries index was up 13.5 points, or 0.2 per cent, at 5,934.5.

The top gaining sectors were materials (+0.64 per cent), real estate investment trusts (+0.59 per cent), healthcare (+0.50 per cent), consumer staples (+0.49 per cent) and telecommunication (+0.45 per cent). The only significant loser was information technology (-0.90 per cent).

Stocks

An uptick in commodity prices, likely due to the brief weakness in the US dollar, aided market sentiments in favour of mining stocks. BHP Billiton Limited (ASX:BHP) gained 0.71 per cent to AU$31.22, Fortescue Metals Group Limited (ASX:FMG) was up 1.52 per cent to AU$2.01, but Rio Tinto Limited (ASX:RIO) fell 1.44 per cent to AU$57.37. Atlas Iron Limited (ASX:AGO) was unchanged at AU$0.140, however Mount Gibson Iron Limited (ASX:MGX) slid 2.22 per cent to AU$0.220.

In breaking news, Fortescue’s Andrew “Twiggy” Forest has called for the largest iron ore companies to publicly announce a voluntary cap on their production so as to stem the relentless fall in iron ore prices. "I'm absolutely happy to cap my production right now," Mr Forrest said. "All of us should cap our production now and we'll find the iron ore price will go straight back up to US$70, US$80, US$90. The tax revenues which that will generate will build more schools, more hospitals, more roads, more of everything which Australia needs, universities … by a quantum than this foolhardy attitude of deepening your expansions into a falling price."

Energy stocks closed mixed. Though Origin Energy Ltd (ASX:ORG) was up 0.77 per cent to AU$11.74, and Santos Ltd (ASX:STO) shot up 1.37 per cent to AU$7.39, Woodside Petroleum Limited (ASX:WPL) fell 0.34 per cent to AU$35.41 and Oil Search Limited (ASX:OSH) was down 0.52 per cent to AU$7.68. Woodside Petroleum confirmed Tuesday that 300 more jobs were being eliminated, according to The Sydney Morning Herald, who also said the company had frozen its pay levels.

The largest banks also showed divergent trends. While Commonwealth Bank of Australia (ASX:CBA) fell 0.41 per cent to AU$95.09, and National Australia Bank Ltd. (ASX:NAB) slipped 0.59 per cent to AU$38.95, Westpac Banking Corp (ASX:WBC) gained a slim 0.03 per cent to AU$39.57 and Australia and New Zealand Banking Group (ASX:ANZ) closed higher by 0.24 per cent to AU$36.89.

However, retailers closed with gains across the board. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, was up 0.52 per cent to AU$44.22, Woolworths Limited (ASX:WOW) gained 0.31 per cent to AU$29.05, and Myer Holdings Ltd (ASX:MYR) was up 0.37 per cent to AU$1.36. Myer clarified that it only found that it would fail to meet its full-year profit forecasts by about AU$15 million on the day before it reported its interim profit results, according to The Australian. The retailer has been in the dock for its surprise full-year profit downgrade, when about a fortnight earlier its chairman had confirmed there was nothing to disclose to the market on profit forecasts. Clothing retailer Kathmandu Holdings Ltd (ASX:KMD) slumped 12.42 per cent to AU$1.38, and was the largest loser on the S&P/ASX 200, after it reported a highly disappointing half yearly earnings result.

Amongst telecom and Internet stocks, Telstra Corporation Ltd (ASX:TLS) was up 0.47 per cent to AU$6.38 and TPG Telecom Ltd (ASX:TPM) jumped 3.51 per cent higher to AU$9.14, but iiNet Limited (ASX:IIN) slumped 2.15 per cent to AU$8.66 as controversy swirled around its acceptance of a takeover bid by TPG Telecom. TPG’s CEO Teoh has offered to meet iiNet founder Michael Malone, one of the most high-profile and vocal critics of the transaction, to explain to him TPG’s position and how it would handle the acquisition of iiNet, according to ITWire. Teoh said: "When you look at iiNet, its strong branding is created by the good people, the good team at iiNet and we cannot destroy that. We need that good team of people in place. They have fabulous people in the Cape Town call centre. I think it would be a good alternate site for TPG as well.”

Airline stocks ended mostly in the red. Qantas Airways Limited (ASX:QAN) slipped 1.64 per cent to AU$2.99 after the ACCC shot down its proposed coordination agreement with China Eastern airlines. Virgin Australia Holdings Ltd (ASX:VAH) remained unchanged at AU$0.510.

Economic news, currency and insight

Australia may join the China-led Asian Infrastructure Investment Bank as early as this week after the country’s cabinet reportedly approved the move according to The Australian. Prime Minister Tony Abbott will personally explain the decision to US President Barack Obama before the final decision is taken. Australia, as a founding member of the bank, may contribute anything between AU$300 million and AU$3 billion to the fund.

Australian Defence Force Financial Services Consumer Centre chairman, Air Commodore Robert Brown, charged that Australia’s financial advice industry was plagued by hazardous remuneration structures that encouraged aggressive selling by financial planners, thereby creating customer distrust when their questionable recommendations were exposed. "Could it be that the industry is deliberately avoiding its deeper structural problems, by suggesting that all will be resolved by getting rid of a few bad apples?" he asked at the Australian Securities and Investments Commission annual forum in Sydney on Tuesday.

The Australian dollar rallied to a two-month high in overnight trade, despite better economic data out of the US. At 07:00 (AEDT), the local currency was trading at US78.76c, up from US78.67c on Tuesday, according to Business Spectator.

The Australian stock market is likely to open lower today given that June ASX SPI200 Index (AP) Futures were down 10 points at 5,968.0 at 06:59 this morning (AEDT).