Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Australian shares pushed higher for a second day in a row as energy stocks continued to rally after slumping on last week's global oil price shock.
The market posted broad gains in spite of the most disappointing quarterly economic growth reading in nearly six years.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lifted 0.8 per cent, on Wednesday to 5321.8 points and 5301.2 points respectively, after taking a positive lead from the United States and Europe.
Local shares continued to move higher in the afternoon despite Australian Bureau of Statistics data that showed much weaker than expected economic growth in the September quarter. Gross domestic product grew by just 0.3 per cent over the three-month period, missing consensus forecasts for a rate of 3.1 per cent.
"The third quarter GDP result was a big miss for the market ... the biggest downside surprise since the fourth quarter 2008," Citi chief economist Paul Brennan said.
Coming a day after the Reserve Bank of Australia held rates at a record-low 2.5 per cent for the 15th month in a row, some strategists noted the weaker than forecast GDP added weight to the argument for another rate cut this cycle.
"The RBA is likely to be disappointed by the small increase in GDP, and we have lowered our forecast for 2015 growth," Barclays' economist Kieran Davies said.
The big four banks were all stronger. Commonwealth Bank of Australia rose 0.8 per cent to $81.40, while Westpac Banking Corporation added 0.3 per cent to $32.84. ANZ Banking Group gained 0.2 per cent to $31.77, and National Australia Bank added 0.1 per cent to $32.43.
The battered energy sector was broadly higher despite Brent crude oil slipping 2.2 per cent to $US71 a barrel on Tuesday night. After Monday's sharp sell-off across the energy sector, investors are re-evaluating the value of oil and gas producers on a case-by-case basis.
"The swift sell-off in energy stocks, in response to the recent slump in oil prices, created an attractive entry point for long term investors into any high quality producer with a cost of production below the current commodity price," Wingate Asset Management portfolio manager Chad Padowitz said.
Australia's biggest oil producer Woodside Petroleum lifted 2.2 per cent to $35.64, and Oil Search added 0.3 per cent to $7.72, while Santos dropped 1.2 per cent to $9.08.
Liquified Natural Gas was the best-performing stock in the ASX 200, climbing 13.9 per cent to $2.86.
Mr Padowitz expects there will be about a six-month lag time before global oil supply contracts.
"In the meantime things will be volatile but I will be surprised if the oil price is not back north of $US80 per barrel in 12 months time".
BHP Billiton edged up 0.1 per cent to $30.44. A number of US analysts have noted the resources giant's US shale business is better placed to weather the oil price shock than most rivals.
Rio Tinto inched ahead 0.1 per cent to $57.98, while iron ore miner Fortescue Metals Group added 5.5 per cent to $2.71 as several senior executive positions were cut amid ongoing cost reductions.
The spot price for iron ore, landed in China, fell 0.6 per cent to $US70.67a tonne on Wednesday - down 47.5 per cent year-to-date.
Food and liquor giant Woolworths added 2.2 per cent to $30.90 as it announced the acquisition of Chinese alcoholic drinks distributor Summergate. Main rival Wesfarmers, owner of Coles, rose 1.6 per cent to $41.64. Among other major stocks Telstra Corporation rose 0.2 per cent to $5.68, while Medibank lifted 0.5 per cent to $2.15.
A renounceable rights issue from Harvey Norman was the worst-performing security on the ASX 200, dropping 9.8 per cent. The household goods retailer's regular stock was up 0.3 per cent at $3.66.