Australian shares have broken a six-day losing streak with a surprise gain. The market was tipped to fall on Wednesday, after crude oil prices continued their slide as Russia faces an economic crisis that strategists worry will spill over into other markets.
But local shares lifted in early trade and kept afloat despite a pull-back throughout the afternoon.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each gained 0.2 per cent, on Wednesday to 5161.9 points and 5140.6 points respectively, as a rebound in battered energy stocks buoyed the bourse.
In currency markets the Australian dollar was 0.8 per cent weaker when the ASX closed, at a 4½-year low of $81.53, having fallen sharply during the Asian trading session.
Brent crude oil fell another 0.9 per cent to $US59.34 a barrel, hovering near five-year lows after it dropped more than 48 per cent since June. Ratings agency Standard & Poor's has slashed its crude oil forecasts for the second time this month as producers refuse to constrict supply despite a glut.
"There is a capacity war going on between Organisation of the Petroleum Exporting Countries and the rest of the world, particularly US shale producers. If crude oil prices fall as far as $US50 per barrel and stay there for a while it could prompt OPEC to call an emergency meeting," Pengana Global Resources Fund portfolio manager Ric Ronge said.
Yet energy was the strongest sector on Wednesday, up 3 per cent. Resource stocks got a bounce after selling down heavily in recent weeks amid crumbling commodity prices.
"No one can credibly tell you that they know what is going on in energy markets at the moment. There are so many moving parts. We have seen a return to volatility as traders lurch from one data-point to another in quite a reactionary way," Mr Ronge said.
Australia's biggest oil producer, Woodside Petroleum, gained 3 per cent to $35.50. A Fitch Ratings report flagged that Woodside's $4.6 billion acquisition of two liquefied natural gas projects from Apache earlier in the week "trims its ratings headroom".
"While Woodside's ratings are not immediately affected by the announced transaction with Apache, its ratings could come under pressure if its funding requirements add a material amount of debt such that its financial leverage increases to levels not commensurate with its BBB+ ratings for a sustained period of time," Fitch Ratings director Sajal Kishore said.
Resources giant BHP Billiton rose 0.3 per cent to $27.51, while Rio Tinto jumped 1.4 per cent to $53.38. The biggest miners were stronger despite the spot price for iron ore, landed in China, slipping 0.7 per cent to $US68.58 a tonne – down 49 per cent year-to-date. When the local market closed, Dalian iron ore futures trading in China pointed to a lift overnight. BC Iron was the best-performing stock in the ASX 200, climbing 16.7 per cent to 42¢.
The big four banks were mixed. Commonwealth Bank of Australia edged up 0.1 per cent to $81.02, while Westpac Banking Corporation fell 0.8 per cent to $31.33. ANZ Banking Group dropped 0.9 per cent to $30.47, and National Australia Bank shed 0.5 per cent to $31.35.
Among other major industrial stocks Telstra Corporation lifted 0.7 per cent to $5.76, after earlier in the session touching $5.80, while Medibank Private fell 0.4 per cent to $2.28. In retail Woolworths fell 0.2 per cent to $29.14, while rival Wesfarmers, owner of Coles, added 0.4 per cent to $40.52.
As the busiest year for initial public offerings since the global financial crisis draws to an end, investor appetite for floats seems to be cooling.
Two new listings hit the boards at a discount on Wednesday. Outdoor advertiser oOh! Media closed 1.6 per cent below its $1.93 offer price at $1.90, while Latin America-focused online auto classifieds operator LatAm Autos ended its first session 18.3 per cent below its 30¢ per share offer price at 24.5¢.