ASX slips on oil as energy stocks kill rally

An early sharemarket rally on Monday turned into a fizzer, dragged down by energy stocks amid a free falling oil price. 

The S&P/ASX 200 index climbed as much as 1.5 per cent early to 5230 following the strongest day on Wall Street in almost three months on the back of positive jobs numbers and dovish commentary by the European Central Bank.

But the gains were short lived and the benchmark index ended just 4 points, or 0.08 per cent, higher at 5155.7, while the broader All Ordinaries index closed 4 points, or 0.09 per cent, higher to 5205.9.

The energy stocks did the bulk of the dragging, as the Brent oil price fell 0.7 per cent to $US42.69 during the Asian trading session after the half-yearly Organisation of Petroleum Exporting Countries meeting ended in Vienna on Friday with no cuts to supply. 

Woodside Petroleum fell 3.7 per cent to $28, Origin Energy fell 5.5 per cent to $5.12 and Oil Search lost 5.4 per cent to $7.52. Santos was the worst hit, falling 9.9 per cent to $3.81.

“Santos is coming off the back of a big capital raise, they’ve had some outperformance since… then we had the OPEC announcement and oil price movement, and given it is a somewhat illiquid market this time of year movements can be exaggerated,” Aurora Funds Management senior portfolio manager Sheriden Hure said.   

Diversified miner BHP Billiton fared better, closing 0.3 per cent higher to $17.99 as metals prices firmed late last week. This included gold, which rallied 2 per cent last week, helping lift Newcrest Mining 2.9 per cent to $11.97. Evolution Mining and Northern Star Resources were also among the best performing stocks, up more than 5 per cent each.

“The differential between the energy side and the mining side reflected what we saw in commodity markets, there was good support for the metals but the oil price fell away in the wake of the OPEC meeting,” Patersons economist Tony Farnham said.

In the other blue chips, Telstra proved the biggest drag on the index among the heavyweights as the telecommunications stocks fell across the board. Its shares fell 1.6 per cent to $5.32. 

Wesfarmers and Woolworths both ended lower, down 0.1 per cent to $38.50 and 0.5 per cent to $23.88. 

The banks were the best performers of the blue chips, keeping the index above water for the session. Commonwealth Bank rose 0.4 per cent to $80.51, Westpac Banking Corporation added 0.7 per cent to $32.52, and ANZ Banking Group rose 0.6 per cent to $27.27. National Australia Bank lagged, down 0.2 per cent to $29.56 after updating the market on its British demerger timeline.

“Particularly this morning with the strong start, people found confidence to step in and buy the banks after the Friday weakness, however they drifted over the entire session,” Ms Hure said. 

The best performing stock for the day was Broadspectrum, formerly known as Transfield Services. Its shares rallied 47.7 per cent to $1.25 after Spanish infrastructure giant Ferrovial launched a hostile takeover bid worth $715 million.

In more merger and acquisition news, Estia Health acquired Kennedy Health Care through debt funding and the issuance of $50 million in Estia stock and rounding out $400 million in acquisitions this year. Its share price fell 2.2 per cent to $7.01. 

In other company news, iSelect shares fell 11 per cent to $1.08 after a bid by private equity firm Providence was pulled. 

It was also a bad day for new listing McGrath, with the real estate group closing 12 per cent off its $2.10 listing price to $1.84.

The worst performing stock was Spotless Group, falling 13.7 per cent, followed by Arrium, down 11.4 per cent. 

Across the sectors, consumer discretionary was the best, up 0.9 per cent, followed by utilities up 0.7 per cent. Energy was the worst, down 4.5 per cent, followed by the telcos, down 1.6 per cent.

Read more: http://www.smh.com.au/business/markets/asx-slips-on-oil-as-energy-stocks-kill-rally-20151207-glh72h.html#ixzz3td0v73EL