ASX CLOSE: Market surges; Newcrest and Lihir Gold lead the way

Tuesday 8th September 2009

Across Asia, regional markets are trading higher, led by gains among banks and technology stocks following strong overnight leads from Europe and the UK. The Nikkei 225 and Kospi both finished 0.7% higher while the Shanghai Composite and Hang Seng are still trading, currently up 0.8% and 0.6%.

While markets across the region are all in the black, the real test will come tonight when many funds and traders return from summer holidays. The question is whether or not markets can maintain Friday's momentum or whether the bulls succumb to the ‘September effect'.

In Australia, the ASX 200 finished up 1.6% at 4523.8 after Australian business confidence surged to its loftiest level in almost 6 years.

The National Australia Bank business confidence survey showed a jump of 8 points in August from July to +18. Domestic demand looks to be strong and defying expectations that it was set to fall once the affects of the economic stimulus began to fade. This adds to mounting evidence that Australia's economy has turned the corner and increases speculation the RBA may look to raise rates sooner rather than later.

In terms of sectors, the materials (2.1%), financials (1.9%), consumer discretionary (1.5%) and energy (1.3%) added the lion's share of points in broad-based gains.

A night of bullish materials leads from London saw materials stocks very well bid. Newcrest Mining led the way, up 3.7% while Lihir Gold was 3% higher. The major diversified miners weren't too far away, however with the likes of Fortescue Metals Group, BHP Billiton and Rio Tinto all up between 2.2% and 3%, with Fortescue Metals Group the best performer.

On the charts, gold looks very strong. It's holding on top of the June 3 pivot support at $990.2 and is consolidating at the upper end of last week's big range expansion. This, without any meaningful pullback is bullish and shows significant underlying buying support.

Overnight leads from London were supportive with Copper and Aluminium gaining 0.2% and 0.4% respectively, while Nickel and Zinc fell 0.8% and 0.6%. Rio Tinto (2%) and BHP Billiton (2.4%) both finished higher, while Anglo American and Xstrata were up too, rising 0.3% and 2.5%.

Among financials, most of the sector finished in positive territory today. National Australia Bank and Macquarie Group led the way, both up 3.8%. Elsewhere, the other three major banks were all up between 1.7% and 2.8%, with ANZ the standout.

Leads from the UK's financials were positive with the FTSE Financials sector rising 1.6% overnight. HSBC rose 1%, Barclays 2.2% and Lloyds Banking Group 4.5%.

In the consumer discretionary space, the media stocks outperformed following the business confidence data. Ten Holdings, Fairfax Media, Crown and Tattersalls were the big movers, all up between 2.1% and 7.8%, with Ten Holdings fronting the pack.

In the energy space, Paladin Energy (6.3%), WorleyParsons (2.6%), Woodside Petroleum (2.1%) and Caltex Australia (1.5%) were the biggest gainers. Overnight, Crude Oil was fairly quiet, currently trading at $68.47 per barrel.

Elsewhere in the market, Downer EDI (-0.4%) this morning announced that its mining division had secured new contracts and work under management with major international clients totalling over $500 million. These include a five-year contract with Ensham Resources to provide lasting services to its Western Bowen Basin open-cut coal operation.

Also, AGL Energy (0.2%) reported this morning that is has been selected as the renewable energy supplier for South Australia's new 100 gigalitre per annum desalination plant under construction south of Adelaide. The contract is for a term of 20 years.

Prices are in AUD unless otherwise stated.
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