S&P ASX200 Rises As Wesfarmers Jumps On Spin-Off Plans – Market Outlook Positive

Australian shares rose on Friday, boosted by retail giant Wesfarmers which soared after announcing plans to spin off its Coles supermarket division but falls in banking stocks limited gains.

The S&P/ASX 200 index rose 0.3 percent or 14.6 points to 5,935.4 by 0031 GMT but was set to finish the week lower. The benchmark fell 0.2 percent on Thursday.

Investors rushed to buy Wesfarmers’ stock after it announced plans to spin off its Coles supermarket chain and list it on the Australian Securities Exchange, sending shares up as much as 6 percent – its biggest intraday surge in over eight years.

The best performers of the session on the S&P/ASX 200 were Wesfarmers Ltd, which rose 6.21% or 2.560 points to trade at 43.760 at the close. Meanwhile, South32 Ltd added 5.78% or 0.185 points to end at 3.385 and Premier Investments Ltd was up 5.63% or 0.810 points to 15.200 in late trade.

Rising stocks outnumbered declining ones on the Sydney Stock Exchange by 686 to 534 and 340 ended unchanged.

Shares in Premier Investments Ltd rose to 52-week highs; gaining 5.63% or 0.810 to 15.200.

The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 5.92% to 11.729 a new 1-month low.

“(The gains) are relatively short-term at the moment because markets are looking forward to what’s going to happen next week with the US Federal Reserve, and when you’re at stretch valuations that are probably a negative,” said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

The US central bank is expected to raise interest rates for the first time this year at the Federal Open Market Committee meeting next week.

On the technical charts, S&P ASX200 is trading in the positive zone above all the moving averages (9 day, 20 day, 50 day, 100 day and 200 day). The RSI is at 50.45 and the MACD is below the signal line. The market is expected to trade in the positive zone.

Trade suggestion:

Buy stop at 5949, Take profit at 6010, Stop loss at 5920

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