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Barrier broken, market rise goes on

16 Feb 2013 THE AGE - BY GARETH HUTCHENS


THE sharemarket blew past the psychologically important 5000-point barrier this week, thanks in large part to a record profit from Commonwealth Bank on Wednesday.

Australia's biggest bank beat market expectations with a $3.78 billion half-year profit, the announcement taking the bank's market capitalisation to $108 billion.

It helped the market to close above 5000 on Wednesday for the first time since April 2010, and the index managed to stay above that level for the next two days - even after a weak performance from the big miners on Friday saw the market shed three points.

For the week, the benchmark S&P/ASX 200 Index climbed 62.6 points, or 1.3 per cent, to 5033.9.

There has been talk that global sharemarkets are rising too quickly and the global rally is due for a correction. The local market has risen 26 per cent since its low in June 2012, 3985 points.

But some analysts said they still believed the market was likely to continue rising in the near term, although at a slower rate.

"The easy gains are probably priced out of the market, probably due for some sort of consolidation, but I wouldn't be saying equities are clearly expensive here," David Cassidy of UBS said.

"I think they're still OK, they still look better than bonds. I still think the more likely trend on a three-to-six-month view will be a bit higher.

For the week, AGL Energy rose 8¢ to $15.21 after it won approval for the first stage of a new coal seam gas project in New South Wales.

ANZ slipped 35¢ to $27.77, amid disappointment at its first-quarter earnings result. The bank's underlying cash profit rose 6.3 per cent to $1.53 billion in the three months to December 31, but its statutory net profit dropped by nearly a fifth to $1.36 billion because of accounting adjustments linked to foreign exchange rates and basis hedge valuations.

Commonwealth Bank rose $2.20 to $67.03 after it said its home loan rates could be cut independently of cash rate movements, as improving economic conditions helped it post another record profit.

David Jones rose 6¢ to $2.69 after saying it planned to focus on better-performing fashion and beauty categories by ditching DVDs, music and games.

Goodman Fielder rose 2.5¢ to 71.5¢ after it said prices alone would not be enough to boost its underperforming bakery operations.

Construction company Leighton Holdings rose $2.38 to $22.68, after it returned to profitability and said it was better placed to pick the right infrastructure projects after a couple of years of losses.

Rio Tinto gained 55¢ to $70.15, for saying it would slash costs and sell poorly performing assets after posting its first net loss, almost $3 billion.

Wesfarmers rose 92¢ to $39.55, with chief Richard Goyder looking to increase Coles' sales and cut costs further. With WIRES