Santos and Oil Search have confirmed an impending marriage, and investors liked commodity stocks enough to raise the ASX at the end of the week.
The $21 billion oil and gas merger helped both company’s stocks and the Australian market recovered some losses from Thursday’s 1.9 per cent drubbing.
Investsmart market strategist Evan Lucas said the proposed merger, being recommended to shareholders, simply needed to happen.
“The oil and gas industry over the next decade is going to continue to consolidate,” he said.
“Fossil fuels are going the way of the dodo.”
World efforts to reduce carbon emissions and adopt renewable energy are likely to lower demand for oil and gas.
Mr Lucas was undecided on the merits of investing in the juggernaut.
Traders on the ASX saw compelling benefits. Oil Search investors will receive 0.6275 Santos shares for each Oil Search one.
Oil Search shares closed higher by 2.19 per cent to $3.73. Santos shares closed up 0.5 per cent to $6.06.
Materials shares were the main force in ensuring a good end to the week for the market. Iron ore trader Fortescue climbed 2.58 per cent to $18.27.
However investors had their first weekly loss in the past three. The ASX 200 declined by 1.55 per cent.
The broadest US index, the S&P500, has closed lower for four consecutive sessions as data showed the US economy struggling with the coronavirus.
Federal Reserve Bank governor Michelle Bowman joined peers in saying the central bank remains likely to trim bond purchases later this year.
US inflation data, due next week, will give policymakers and investors more to consider.
In Australia, the scale of the damage to the economy from lockdowns will be evident in Thursday’s jobs data.
The ACT, NSW and Victoria have endured lengthy stay-at-home orders and a jobs decline is expected.
Most regional residents of the states this week won a reprieve.
The benchmark S&P/ASX200 index closed higher by 37.1 points, or 0.5 per cent, to 7406.6.
The All Ordinaries on Friday closed up by 47.3 points, or 0.62 per cent, to 7706.2.
After all-time highs in August, the indices have in September fallen to the levels of late July.
Among the big winners in materials shares was South32. Its shares jumped 5.88 per cent to $3.42 after a similar-sized loss on Thursday.
Lithium and iron ore miner Mineral Resources climbed by 5.88 per cent to $53.16.
In banking, the big four closed higher by a maximum of about half a per cent.
Smash repair group AMA will raise $150 million from investors to offset the effect of fewer cars on the road during the pandemic.
AMA Group is selling shares and convertible notes to professional and retail investors.
The company said the funds would also help liquidity and business growth.
Shares were paused from trading and last swapped for 42 cents.
Share market software vendor Iress has given potential suitor EQT Fund Management more time to assess a takeover.
Iress has allowed 10 more days to the 30 already granted for due diligence.
EQT has proposed buying all shares for $15.91 each.
Shares in Iress on the ASX were down 1.93 per cent to $13.72.
Uber-style courier provider Zoom2u joined the ASX as part of efforts to expand overseas.
Shares closed higher by 115 per cent to 43 cents.
Investors bought shares in the initial public offer for 20 cents each and raised $8 million.
The Australian dollar was buying 73.93 US cents at 1728 AEST, higher than 73.60 US cents at Thursday’s close.
ON THE ASX
* The benchmark S&P/ASX200 index closed higher by 37.1 points, or 0.5 per cent, to 7406.6 on Friday.
* The All Ordinaries closed up by 47.3 points, or 0.62 per cent, to 7706.2.
* At 1728 AEST, the SPI200 futures index was up 11 points, or 0.15 per cent, at 7407 points.
CURRENCY SNAPSHOT
One Australian dollar buys:
* 73.93 US cents, from 73.60 cents on Thursday
* 81.30 Japanese yen, from 81.03 yen
* 62.44 Euro cents, from 62.33 cents
* 53.32 British pence, from 53.49 pence
* 103.56 NZ cents, from 103.71 cents.
