Santos backs $18.7 bln takeover bid; shares soar
Oil prices surge on Middle East tensions
Energy stocks hit highest levels since mid-Oct
Banks and gold stocks fall on profit-taking – analyst
June 16 (Reuters) – Australian shares closed flat on Monday, as a rally in energy stocks driven by higher oil prices was partially offset by weak performances across gold miners, even as gas producer Santos surged following an $18.7 billion takeover bid.
The S&P/ASX 200 index held its ground at 8,548.4 points at the close of trade. The benchmark ended 0.2% lower on Friday.
The Australian energy sub-index benefited from higher crude oil prices after renewed strikes by Israel and Iran over the weekend deepened fears that the conflict could spill across the Middle East region and severely disrupt oil exports.
Local energy stocks surged more than 5%, extending their winning streak to a sixth consecutive session and climbing to highest levels since mid-October.
The energy sub-index got an additional lift from Santos , Australia’s second-largest gas producer, which backed an $18.7 billion all-cash takeover bid led by Abu Dhabi’s National Oil Company (ADNOC).
This sent Santos shares soaring up to 15% in their best single-day performance since April 2020.
On the other hand, Australian gold stocks dropped more than 5%, dragging the broader mining sector lower and marking their weakest intraday performance since May 13, despite a surge in bullion prices.
Sector majors Northern Star Resources and Evolution Mining slumped almost 8% each.
“Investors are likely profit-taking today from the record gold price hit on Friday as well as portfolio adjustments in a bid to adapt exposure to weather the current uncertain geopolitical and macro conditions,” said Grady Wulff, a market analyst at Bell Direct.
Financial stocks slipped 0.2%, led by a 0.3% decline in Westpac Banking Corp.
Wulff said that, similar to gold, investors are likely taking profits from financial stocks and repositioning their portfolios in anticipation of heightened market volatility amid escalating tensions in the Middle East.
New Zealand’s benchmark S&P/NZX 50 index rose over 1% to finish the session at 12,690.13 points.
(Reporting by Adwitiya Srivastava in Bengaluru; Editing by Sherry Jacob-Phillips)
