ASX weekly: BHP, Rio Tinto, Telstra & CSL lead gains

The Australian share market closed at an 11-year high last week, with the major miners, the telco giants and biotech heavyweight CSL leading market-wide gains.

The benchmark S&P/ASX 200 and the broader All Ordinaries both closed 1.7% higher at 6,554 points and 6,634 points, respectively last week.

Leading sector gains were the mining-related materials (up by more than 5%) thanks to a rally in iron ore prices, followed by strong gains across the healthcare and telecommunications sectors (both up by almost 4%).

This was reflected in the top five biggest market capitalisation gains for the week, with BHP adding $7.2 billion to its total market value after the miner’s shares rose 6.5% to $40.30 a share.

CSL had the second highest gain of $4.11 billion after its share price hit a six-month high of $212.84 on Thursday thanks to positive broker reports.

Market analysts also said the lower Australian dollar against the greenback was likely boosting CSL’s shares, given the company earns the majority of its revenue in US dollars.

Miners Fortescue Metals and Rio Tinto both added nearly $3 billion to their market values (coming in third and fourth place, respectively), while Telstra came in fifth place with a market value gain of $1.8 billion.

AMP Capital Chief Economist Shane Oliver said Australian shares rose to an 11-year high led by resources stocks and defensive sectors like healthcare, telcos and the supermarket-dominated consumer staples.

Meanwhile, the retail-related consumer discretionary sector came under pressure, after data showed consumer confidence was weak.

“Consumer confidence softened in June with responses up after the May 18 federal election, but falling sharply again after the rate cut and weak GDP data,” Dr Oliver said.

He said Australians’ caution around spending and taking on debt was highlighted by the Westpac Consumer Confidence index, which showed a quarter of those surveyed believed paying down debt was the wisest use of savings at the moment.

Bunnings, Kmart and Officeworks owner Wesfarmers was a major drag for the retail sector last week, with its market value sliding by $2.3 billion to lead market cap losses.

Driving Wesfarmers’ share price fall was the retail conglomerate’s negative trading update that forecast earnings for Kmart to be between $515 million and $565 million for the 2019 full-year, down 10.5% to 18.4% on the prior year’s $631 million earnings before interest and tax.

Among the weak performers last week was Afterpay Touch after news broke the ‘buy now, pay later’ service faces an anti-money laundering investigation.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) announced last week that it had identified concerns with Afterpay’s compliance and will appoint an external auditor to examine its compliance with anti-money laundering and counter-terrorism financing laws.

As a result, Afterpay suffered the third largest share price fall, with its share price tumbling by almost 11% to $21.59 a share.

As for last week’s top five share price winners, telecommunications group Vocus was in first place after its shares jumped by nearly 14% following a takeover offer from AGL Energy. However, news out today says AGL has now withdrawn its $3 billion offer.

Mining services company Ausdrill was not far behind Vocus, with its shares rising 13.2%, while waste management company Bingo Industries share price rose by almost 13% despite no obvious news driving the gain.