Market Wrap: Aus shares higher for 10th day
Aus shares higher for 10th day. Echo Entertainment Group Limited (ASX:EGP) reports stronger profits in the first half.
PT4M35S http://www.smh.com.au/action/externalEmbeddedPlayer?id=d-3pi6y 620 349 February 4, 2015 – 5:28PM
Shares have closed up for a 10th straight day, in a spectacular rally that has added about $ 145 billion to the market’s value, as investors remain intoxicated by the prospect of even lower rates.
Rising oil prices, bullish global markets and hopes for a solution to the Greek debt standoff added to the upbeat mood.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each gained 1.3 per cent and finished at 5772.1 points and 5730.0 points respectively. In early trade the benchmark had even climbed through 5800 for the first time since May 2008 as banks continue to attract investors and commodity plays, particularly energy stocks, jumped on higher prices.
Platypus Asset Management chief investment officer Donald Williams said the Reserve Bank’s decision to cut the cash rate to 2.25 per cent had an “unambigously positive” impact on the equity market.
“At the very least having the rate cut, with potential for another rate cut, means better prospect for capital return in the equity market,” Mr Williams said.
Overnight, global markets rose, with Wall Street’s S&P 500 adding 1.4 per cent to 2050, on higher oil prices, while European stocks also climbed higher as Greece restored hopes the debt-ridden nation will not attempt to write off its debts.
Locally, the big four banks led the gains, with Westpac Banking Corp hitting a record high at $ 36.23, up 2.7 per cent. Commonwealth Bank of Australia gained 0.4 per cent to finish at $ 90.79, also a new record. Both banks reduced their home loan rates following the RBA decision.
Australia and New Zealand Banking Group was 1.5 per cent ahead at $ 34.62 and National Australia Bank added 0.8 per cent to $ 36.50.
Mr Williams said yield trade became more attractive in the post rate cut environment.
“Yield trade is well and truly back on. Financials is a reasonable place to invest, as they have high running yields,” he said.
Energy shares enjoyed a strong lift on the back of recovering oil prices. Overnight benchmark Brent crude oil went up $ US3.40 to $ US58.15 a barrel, up nearly 20 per cent since January, a trend Wingate Asset Management chief investment officer Chad Padowitz expected to continue.
“We don’t think oil is sustainable at $ US45 to $ US50 [per barrel]. As it moves to $ US70 to $ US80 the price you need to meet the current demand,” Mr Padowitz said.
Australia’s biggest oil producer Woodside Petroleum closed at $ 35.87, 0.5 per cent ahead, while Origin jumped 3.4 per cent to $ 12.10.
Some of the biggest gainers of the day were iron ore miners after the spot price for the bulk commodity gained 1.2 per cent to $ US63.18 a tonne overnight. Fortescue Metals Group surged 8.9 per cent to $ 2.58, BC Iron gained 15.8 per ecnt to 55¢, while Atlas Iron jumped 27.3 per cent to 21¢.
Resources giant BHP Billiton added a hefty 4.4 per cent to close at $ 31.99 on rising iron ore, oil and copper prices, while its main rival Rio Tinto was $ 60.7, up 3.7 per cent.
Telstra Corp meanwhile shed some of its recent gains, losing 1.1 per cent to close at $ 6.60.
The biggest food and liquor sellers also gained. Woolworths added 1.5 per cent to $ 32.79, while Wesfarmers, owner of Coles Supermarkets, added 0.8 per cent to $ 44.53.
Materials was the best-performing sector, up 3.3 per cent, as the recovering commodity price fuelled further investment. Telecommunications was the worst-performing sector, down 1.0 per cent.
Nufarm was the worst-performing stock in the ASX 200, collapsing 4 per cent at $ 5.77¢.