Market races into bull territory
Stars are aligning for stocks as global risks fade.
The sharemarket has ended sharply higher, led by the big banks and chalking up gains for a ninth straight session.
The benchmark S&P/ASX200 index jumped 53.8 points, or 1.1 per cent, higher to a new 21-month high of 4889.0, while the broader All Ords added 52 points, or 1.1 per cent, to 4910.9.
The market's gains were led by the financials sector, which added 1.3 per cent. Defensive sectors such as health and telco posted strong gains, rising 2.5 per cent and 1.9 per cent respectively.
Materials underpeformed adding just 0.2 per cent, while the gold sector slumped 2.6 per cent.
The Australian sharemarket, together with global equities, has risen by more than 20 per cent in the past six months - usually the definition of a bull market, Bell Potter Securities research director Peter Quinton notes.
But Mr Quinton said using such a definition at this time was "a little bit aggressive" for the local sharemarket.
‘‘Having said that, I think there are very solid fundamental underpinnings to those 20 per cent risings,’’ he said. ‘‘The brutal reality is ... there’s still risks out there but anybody who has been bearish about the stock market for the past six months has been proved dramatically wrong.’’
Lots of good news
CMC Markets chief market strategist Michael McCarthy said investors had been buoyed in recent days by better-than-expected manufacturing data from Germany; European stock markets reaching new highs; good company earnings reports out of the United States, especially Caterpillar; and rallies on the Chinese market on Monday.
A surprisingly strong reading in local business confidence added to the market's good mood.
‘‘We’re getting a tick in every major global region at the moment,’’ Mr McCarthy said. ‘‘And, added to that we’ve got that local factor: the fear of missing out (on the market’s move upward).’’
Mr McCarthy said defensive stocks - those offering higher yields - had led the local bourse higher today.
Among the major banks, Westpac rose 67 cents, or 2.4 per cent, to $28.22, Commonwealth Bank lifted $1.14, or 1.8 per cent, to a new all-time high of $64.73, National Australia Bank found 48 cents at $27.72, and ANZ advanced 44 cents to $26.51.
Insurers feel the floods
Some insurance stocks fell as insurers began to feel the pain from ex-tropical cyclone Oswald, with more than 10,000 claims lodged and the damage bill set to rise above $100 million.
Suncorp descended 21 cents, or 1.9 per cent, to $10.70 as it said it had so far received about 4500 claims and expects more to come as floodwaters in some areas of Queensland and NSW yet to peak.
QBE dropped 31 cents, or 2.7 per cent, to $11.28, while Insurance Australia Group nudged up one cent, or 0.2 per cent, to $4.93, erasing earlier falls.
In the resources sector, global miner BHP Billiton improved seven cents to $37.17, and Rio Tinto firmed nine cents to $66.15.
Coal miner Yancoal was steady at 93 cents after it said one of its open-cut mines in Queensland had been flooded and production would be impacted for at least three weeks.
Lakes Oil surged 0.2 cents, or 50 per cent, to 0.6 cents as mining billionaire Gina Rinehart snared a major stake in the veteran oil and gas explorer.
Oil Search stepped forward 9 cents to $7.20 as it produced 6.38 million barrels of oil equivalent (mmboe) in 2012, which the company said was within its guidance range.
Oil and gas producer Beach Energy climbed two cents to $1.40 as it said it still expects to meet its full year production targets despite a fall in the second quarter of the financial year.
Defensives looking 'bloated'
Defensives finished the day firmer. Blood products maker CSL rallied 3.7 per cent while Telstra jumped 2 percent to a five-year high of $4.67.
"With defensive stocks looking more and more bloated, and with the end of the month fast approaching, fund managers may see value in reweighing portfolios from equities to other instruments due to their stellar performance over the month," said Stan Shamu, market strategist at IG Markets.
Preliminary national turnover was 1.9 billion securities worth $5.07 billion, with 571 stocks up, 435 down and 367 unchanged.
BusinessDay with wires