Barrier broken, market rise goes on
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
Frequently Asked Questions about this Article…
The ASX reached and held above 5000 largely because Commonwealth Bank reported a record half-year profit that boosted confidence. Strong bank results helped the S&P/ASX 200 climb, closing the week at 5,033.9 after rallying on Wednesday — the first close above 5,000 since April 2010.
Commonwealth Bank reported a $3.78 billion half‑year profit, which lifted its market capitalisation to about $108 billion and saw its share price rise $2.20 to $67.03, contributing materially to the market rally.
A 26% gain (from the June 2012 low of 3,985 points) signals strong recent returns, but the article notes analysts expect the pace of gains to slow. Some talk of a possible correction or consolidation, so investors should be mindful that the easy upside may be largely priced in.
Yes — there has been chatter that global markets may have risen too quickly and could correct. However, UBS analyst David Cassidy said equities aren’t clearly expensive, predicting likely consolidation and a modestly higher trend over a three‑to‑six‑month view rather than a sharp downturn.
Big miners weakened on Friday, which trimmed the market by three points that day. Separately, Rio Tinto posted its first net loss (almost $3 billion) and said it would cut costs and sell poorly performing assets; its shares still rose 55c to $70.15 on the announcement.
Highlights included AGL Energy up 8c to $15.21 after approval for stage one of a coal‑seam gas project; ANZ slipping 35c to $27.77 after mixed results; David Jones rising 6c to $2.69 as it pivots to fashion and beauty; Goodman Fielder up 2.5c to 71.5c on strategy commentary; Leighton Holdings up $2.38 to $22.68 after returning to profitability; and Wesfarmers up 92c to $39.55 as it focuses on boosting Coles' sales and cutting costs.
ANZ’s underlying cash profit rose 6.3% to $1.53 billion for the quarter, but its statutory net profit fell nearly a fifth to $1.36 billion because of accounting adjustments tied to foreign exchange rates and basis hedge valuations — factors that reduced the reported bottom line.
Commonwealth Bank said it could cut home‑loan rates independently of official cash‑rate movements due to improving economic conditions. That suggests lenders may have flexibility, but whether and when individual rates change will depend on each bank’s pricing decisions and market conditions.
Call 1300 880 160
Start a chat
Schedule a call
