Markets Live: Shares enter bull territory

Markets Live: Shares enter bull territory

The sharemarket ends higher for a ninth straight day, led by a rally in the big banks, with CBA hitting a new all-time high.

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That's all for today, folks. Thanks for reading this blog and positng your comments.

Here's our evening wrap of today's session.

What you need to know:


  • ASX closed 1.1% higher at a new 21-month high
  • The AUD has edged up to $US1.0455, 77.74 euro cents and 94.8 yen
  • The Nikkei is 0.3% higher, while Shanghai stocks are down 0.1%
  • Spot gold is trading up 0.4% at $US1661.45,
  • WTI oil is 0.4% higher at $US96.79
  • S&P futures are minimally higher


  • US Case-Shiller 20-city house price index for November; Forecast: 5.2% rise
  • US Consumer Confidence in January; Forecast: 65.1

Local events tomorrow

  • Perth - Wesfarmers releases its second quarter sales results
  • Sydney - First day of the two-day Hastie Group second creditors’ meetings in Melbourne, Sydney, Perth, Adelaide
  • Perth - Australian Property Institute releases its residential property outlook for 2013


Global market are rallying mainly because worst-case scenarios for economies have been avoided, Westpac chief interest rate strategist Damien McColough says:

  • It’s really a removal about the real catastrophe or disaster premium that has been in market rates for some time, As opposed to a confident that the [global economies] are growing strongly, it’s more a confident belief that the worst-case scenario has been averted.
  • It’s not like as if Europe is going to surge ahead in growth or America is going to go well above the 2 per cent per annum growth, but it means the expectation is that the euro is not going to collapse and there is going to be wholesale defaults from Spain or one of the other economies that has been under pressure.
  • So that causes equities to remove some of the negatives and bonds to lose some of their expensive pricing.

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 Quinton says 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.
  • Risks are never zero and a lot of the risks that people are worried about are still there, but they are very much diminished. So it would completely untrue that the risks we’ve been worried about have disappeared but they are a lot less today.
  • 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.

The market's gains were led by the financials sector, which added 1.3 per cent. Consumer stocks did well too, with consumer staples rising 1.5 per cent and consumer discretionary up 1.4 per cent.

Other 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 sectors slumped 2.6 per cent.

The sharemarket has ended sharply higher, chalking up gains for a ninth straight session. The benchmark S&P/ASX200 index jumped 53.8 points, or 1.1 per cent, higher at 4889.0, while the broader All Ords added 52 points, or 1.1 per cent, to 4910.9.

The Australian dollar got a confidence boost today, shooting up near four-year peaks versus the yen and rising against the greenback and the euro as a jump in business confidence underpinned the currency.

The dollar advanced to $US1.0444 in late trade, from $US1.0412 early, having touched one-month lows of $US1.0384 on Monday. It gained momentum on the euro, rising to 77.62 euro cents from 77.17 euro cents earlier today.

It made bigger strides against the yen and was last seen flirting with a fresh four-year peak of 95.08 yen scaled last week.

The catalyst for the broad Aussie move higher was a sharp bounce in business confidence in December, according to a private survey, thanks in part to lower interest rates and better news offshore.

The reading gave investors an excuse to modestly pare the chances of further easing by the Reserve Bank of Australia.

Markets pricing now implies a one-in-four chance of a rate cut to a record low 2.75 per cent when the central bank holds its next policy meeting on February 5, from a near one-in-three chance of a cut.

The poor weather has done little to stop today’s domestic confidence pushing our market along in what is proving to be a strong uptrend globally, says CMC Markets trader Ben Taylor:

  • Locally today we are seeing a lot of defensive buying taking our market higher with large stakes being taken across the finance and healthcare sectors.
  • While it seems like the market is full steam ahead there are a number of non-believers warning that our market is vulnerable to correction as stocks are already pricing in an earnings recovery.
  • Personally I believe the risk on sentiment is too hot at the moment to stop this run, we will need to see a clear change in sentiment before I would sell risk in this current environment.
  • Our business confidence read today has also given investors reason to extend their long positions. It seems that a lower interest rate environment is starting to improve confidence among the Australian business community, mix this in with the China rebound and we have a sharp rise in confidence.

Macquarie Equities Ltd has entered into an enforceable undertaking with ASIC after the corporate regulator found compliance failures in Macquarie Group's retail stock division.

Macquarie Equities agreed to a review of its Macquarie Private Wealth business, including its licence risk and operating model and systems and its legal and regulatory obligations, the corporate regulator said this afternoon.

ASIC was concerned that the responsibility for compliance sat within the Macquarie Perivate Wealth business and Macquarie Wealth has taken steps to integrate compliance within and reporting to the Macquarie Group-wide compliance function.

'‘Our surveillance found Macquarie Private Wealth fell significantly short of this mark, so ASIC took action,’’ ASIC chairman Greg Medcraft said. ‘‘This is a major EU (enforceable undertaking) affecting one of the wealth industry’s biggest players, which we believe will rectify some serious compliance deficiencies.’’

It requires Macquarie Equities to develop and implement, with the oversight of an independent expert, a plan to rectify any licence risk management and compliance deficiencies.

No longer can the banks rely on that hoary old chestnut of ''high funding costs'' to pass off their failure to match the successive cuts in the official cash rate, Michael West writes in today's most-read business article:

Covered bonds have brought down bank costs even further. In a confidential note to its institutional clients, Westpac describes the fall in wholesale funding costs over the past year as ''extraordinary''.

Margins are fatter than ever, veritably bulging, and there is scant proof that borrowers are getting their grimy fingers on a single cent of it. It's a good thing for shareholders though, some cautious at the listless growth in credit.

The story that the banks spin to their big clients, as opposed to the rest of us, is about as similar as the Chinese and Japanese perspective on who owns the Senkaku Islands.

Here's the whole article

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