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Strong earnings boost shares in February

The sharemarket has closed at fresh four-and-half year highs, buoyed by strong performances across most major sectors, finishing the month on a positive note.

The benchmark S&P/ASX200 jumped 67.5 points, or 1.3 per cent, to 5104.1, its highest close since September 2008, while the broader All Ordinaries gained 67.3 points, or 1.3 per cent, to 5120.4.

Among the sectors, energy surged 2.8 per cent, consumer staples rose 2 per cent, financials added 1.3 per cent and materials pushed up 1.1 per cent.

The strong gains were supported by healthy earnings results as well as positive leads from world markets after US Federal Reserve chairman Ben Bernanke reinforced that the country’s quantitative easing program will continue.

For the month, the S&P/ASX200 was 4.6 per cent higher with the biggest contributors consumer staples stocks and financials, up 9.7 per cent and 6.5 per cent respectively. 

Equities strategist at Bank of America Merrill Lynch Joshua Kirkwood said share prices were pointing to a reporting season that has produced results above expectations.


‘‘It’s clear [companies have] been managing their profit margin very closely,’’ he said. ‘‘The question for investors will be ‘is that reprieve on margins sustainable?’’’

Mr Kirkwood said a positive sign from the profit results over the past month was that dividends have been better than expected.

‘‘One interpretation is that management are reasonably confident that earnings recovery will ultimately come through because they’ve been happy to pay more dividend this time,’’ he said.

Among companies reporting results on Thursday supermarket giant Woolworths saw its first half profit jump 19 per cent to $1.15 billion. As a result its shares added 2.7 per cent to $34.93. Investors also rewarded rival Wesfarmers, up 1.3 per cent to $41.03, its highest point since June 2007.

Harvey Norman reported a 36 per cent drop in half year profit to $81.9 million, despite this shares surged 9.2 per cent to $2.49.

Treasury Wine Estate shares jumped 8.2 per cent to $5.30 after the wine firm’s first half profit jumped 30.8 per cent to $52.3 million.

Miners enjoyed a good run on Thursday, Rio Tinto rose 1.6 per cent to $67.05, BHP gained 1 per cent to $37.07 and Fortescue Metals added 2.6 per cent to $4.72.

Among financials, Commonwealth bank pushed up 1.9 per cent to $67.27, Westpac jumped 1.9 per cent to $30.77, ANZ rose 1.6 per cent to $28.72 and NAB nudged up 0.6 per cent to $30.20.