SYDNEY – Australian shares on Tuesday recovered from a subdued start to close higher for the second session in a row, aided by fresh signs that local business conditions are improving.
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The S&P/ASX 200 index ended up 0.1% or 4.5 points at 5728.9, led by gains in the resources sector. BHP Billiton Ltd. advanced on higher iron-ore and crude-oil prices, while South32 Ltd. clawed back some of Monday's losses following the suspension of coal-mining at underground pits in eastern Australia due to ongoing safety concerns.
Equity bulls drew confidence from the latest NAB survey which put business conditions in Australia at multiyear highs in June. The data bolstered the view that the economy remains solid and job creation will retain some pep.
Also, monthly data on housing finance signaled regulators are achieving success with measures to cool the real-estate market. Lending to investors, a key target of clamps announced at the end of March, fell for a second month in May.
In the resources sector, South32 rose 1.8% to A$2.77 as investors looked through problems at its Illawarra operations where the Appin colliery is offline indefinitely. A common view is that South32's ongoing share-buyback program will support the stock.
UBS was among brokers remaining bullish, but said the market will be watching developments closely "as the restart of Appin is important to both market perceptions of management and to the future of the Illawarra operation more broadly."
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Elsewhere in the resources sector, BHP rose 1.1% to A$24.78 while Rio Tinto Ltd. and Fortescue Metals Group Ltd. gained 0.8% and 3.5% to A$65.62 and A$5.27, respectively.
Investors dialed into telecommunications company Vocus Group Ltd. after private-equity firm Affinity Equity Partners matched an earlier indicative takeover offer by KKR & Co. LP.
Shares in Vocus rose 2.6% to A$3.54, closing above the A$3.50-a-share price that Affinity and KKR have each signaled they are prepared to offer. The bet is that competitive tension will drive up the final offer price, although investors may be mindful that a recent private-equity battle for Fairfax Media Ltd. ended in both suitors walking away after carrying out due diligence.
Positive broker commentary helped bed-linen retailer Adairs Ltd. and mall owner Shopping Centres Australasia Property Group notch up gains.
Goldman Sachs put a buy call on Adairs, saying investors are undervaluing its core competitive offering, vertically integrated model and online investment. It forecast EPS growth of 6% and 10%, respectively, over the next two years to reflect store openings and a return of same-store-sales growth. Adairs closed up 9.2% at A$0.95.
Meanwhile, Credit Suisse raised SCA Property to neutral from underperform, although the upgrade was driven more by recent share-price weakness than a material improvement in the company's prospects. While a solid improvement in supermarket chain Woolworths Ltd.'s food and liquor sales so far this year augurs well, it may be offset by a further slowdown in specialty-sales growth, the brokerage says. SCA Property added 0.9% to A$2.17 by the close.
-Write to David Winning at email@example.com
(END) Dow Jones Newswires
July 11, 2017 03:23 ET (07:23 GMT)