Stocks post broad gains as earnings hopes rise

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Stocks post broad gains as earnings hopes rise

Stocks started the week with broad-based gains as investors prepared for positive earnings news. Gold miners lead resource shares higher.

The benchmark S&P/ASX200 index ended the day up 48.1 points, or 1.1 per cent, at 4541.6 points, while the broader All Ordinaries index rose 47 points, or 1 per cent, to 4554.4 points.

Among sub-indexes, gold stocks rose 2.4 per cent, while materials added 1 per cent. Financials rose 1.3 per cent and industrials gained 1 per cent.

What you need to know

  • The Australian dollar was buying 91 US cents
  • Asian stocks extended gains
  • Spot gold hovered at $US1183 an ounce
  • Crude oil was steady at $US79 a barrel
  • Dow futures were up 61 points to 10,478
  • Wall Street week ahead: What's in store
  • Australian diary: Calendar of the week's events

In corporate news, Kristy Fraser-Kirk, a junior publicist whose sexual harassment allegations forced the resignation of David Jones chief executive officer Mark McInnes is suing him and the company for $37 million.

In economics news, the Reserve Bank of Australia releases its index of commodity prices for July.

The Housing Industry Association released new home sales for June, and the Australian Industry Group and PricewaterhouseCoopers released their Australian Performance of Manufacturing Index for July.

TD Securities and the Melbourne Institute release their inflation gauge for July.

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In companies news, Crane Group and Argo Investments reported full-year results as earnings season begins. Analysts are warning of weaker growth.

RBA view

RBS Morgans Ipswich manager Tony Russell said financial stocks had performed well amid moderate volumes, due to a bank holiday in NSW.

‘‘It’s probably on the back of growing optimism that the RBA will probably leave interest rates as they are tomorrow,’’ Mr Russell said.

‘‘That’s sort of underpinning the confidence in the market today.’’

The RBA will hand down its decision at 2.30pm east-coast time.

The public examination by liquidators into the collapse of Octaviar continues in the NSW Supreme Court.

The Diggers and Dealers Mining Forum begins in Kalgoorlie, Western Australia. Read Barry FitzGerald's Garimpeiro column here.

On the day, about nine stocks rose for every five that ended lower.

The best performing stock on the S&P/ASX50 was Newcrest Mining, which rose 2.8 per cent, or 91 cents, to $33.62.

Fellow gold miner Lihir was the third-best performer, climbing 2.7 per cent, or 11 cents, to $4.18.

At 1620 AEST, the spot price of gold in Sydney was $US1,183.30 per fine ounce, up $US13.45 on Friday's close of $US1,169.85.

Banks advance

At the close, there were only three stocks posting a drop on the S&P/ASX50 - WorleyParsons fell eight cents to $23.06, Foster's Group slipped one cent to $5.75 and Woolworths eased two cents to $25.77.

Among financial stocks, ANZ ended up 27 cents at $23.32, CBA rose 85 cents to $53.41, NAB was 18 cents higher at $25.31 and Westpac advanced 21 cents to $24.20.

Among the big miners, BHP Billiton closed 18 cents firmer at $40.30, while Rio Tinto advanced 54 cents to $71.15.Fortescue Metals was 11 cents higher at $4.40.

In the telco sector, Telstra gained five cents to $3.27, despite announcing after the market closed on Friday the company would incur a non-cash impairment charge of $170 million on the carrying value of its Hong Kong-based mobile phone telco CSL New World.

Optus owner SingTel finished up three cents at $2.56, while Hutchison ended down two-tenths of a cent at 9.7 cents.

DJs to defend

In the retail sector, David Jones closed lower after the department store owner confirmed a current employee, Kristy Fraser-Kirk, had filed legal proceedings in the Federal Court against the company.

Ms Fraser-Kirk is suing the department store, nine directors and former chief executive Mark McInnes for $37 million.

David Jones said in a statement it would ''vigorously'' defend the sexual harassment claims.

The stock closed down four cents at $4.76.

Among the other retail stocks, Myer ended flat at $3.45, while JB Hi-Fi closed up 25 cents at $19.39.

Making news on Monday, Aevum shares soared after the retirement village provider rejected a $266 million cash takeover proposal from real estate group Stockland.

Aevum jumped 41.74 per cent, or 45.5 cents, to $1.545, while Stockland ended up five cents at $3.84.

The top-traded stock by volume was Datamotion Asia, with 59.36 million shares worth $59,360 changing hands.

Datamotion ended steady at 0.1 of a cent.

The company issued its fourth quarter cash flow report after the market closed on Friday.

Preliminary market turnover was 1.49 billion securities worth $3.29 billion, with 663 stocks up, 377 down and 358 unchanged.

On the Sydney Futures Exchange, the September share price index contract was 52 points higher at 4,516 points, with 20,878 contracts traded.

What's was making news earlier today

Prime Minister Julia Gillard has avoided a showdown with the financial services industry by watering down recommendations to overhaul the superannuation industry.

The booming Indian economy faces an energy crunch that could send prices for key Australian exports soaring and deliver an economic boost.

Qantas faces a challenge convincing authorities to grant a two-year extension to its tie-up with South Africa Airways on the lucrative Australia-Africa route.

And overseas, former US Federal Reserve chairman Alan Greenspan has said that falling home prices in the world's largest economy could spell the second wave of a double-dip recession.

Plus, Adele Ferguson on the insolvency industry, Ross Gittins on the need for confidence in economic decision making, Jaswant Singh on the rise of India and Stuart Washington on the theft of others' retirement savings.

Offshore

Wall Street stocks were flat on Friday after recovering from early losses stemming from government data showing a slowdown in the US economic recovery.

The Dow Jones Industrial Average fell one per cent immediately after the Commerce Department reported that US economic growth declined to 2.4 per cent in the second quarter from a upwardly revised 3.7 per cent in the first three months of the year.

But it had erased nearly all the losses at the closing bell after separate economic reports showed better-than-expected readings of consumer sentiment and Chicago-area business activity.

The Dow lost 1.22 points, or 0.01 per cent, to 10,465.94 while the broader S&P 500 index gained 0.07 point, or 0.01 per cent, to 1101.60.

The tech-heavy Nasdaq composite index rose 3.01 points, or 0.13 per cent, to 2254.7.

AAP, with BusinessDay

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