Big banks help to bolster positive mood
THE market closed higher yesterday after the Reserve Bank released the minutes of its latest meeting, and as investors looked forward to a speech by US Federal Reserve chairman Ben Bernanke, due to be delivered last night.
THE market closed higher yesterday after the Reserve Bank released the minutes of its latest meeting, and as investors looked forward to a speech by US Federal Reserve chairman Ben Bernanke, due to be delivered last night.It was the third positive session in a row, which helped investors recover their losses from last week's falls.The S&P/ASX 200 Index rose 35.7 points, or 0.87 per cent, to 4140.8.With no firm leads from Wall Street or Europe and with no new economic data on the local calendar analysts said they had not been sure how the market would behave yesterday.Some said they were scratching their heads after stocks began to rise from the start of trade, and then accelerated from midday.Much had to do with gains in the financial sector which accounts for 40 per cent of the S&P/ASX 200 by market capitalisation with three of the four big banks climbing more than 1.5 per cent, the only laggard being National Australia Bank (up 0.85 per cent).Defensive stocks, such as Telstra, which has been the in-fashion stock for a while now, also did well. Telstra rose 5?, or 1.3 per cent, to $3.88.Every industry sector made gains, but some individual stocks struggled. Troubled paper merchant PaperlinX fell 10.8 per cent to close at 4?, after its chief executive quit and as the company sold more of its overseas operations to complete a strategic review.Despite the rises, analysts said investors remained defensive-minded. "BHP and Rio Tinto aren't really doing anything at all, so there's a flight to quality towards the Aussie banks, which are head and shoulders above their American peers," said Cameron Stockbrokers' Henry Jennings."[Investors] remain very much on the sidelines. What they're looking for are stocks with decent yields . . . [and] the banks are in demand because of their fully franked yields.By yesterday afternoon the futures contract on the benchmark index had risen 31 points in anticipation of Mr Bernanke's speech to the US Congress, where there was talk that he might discuss further stimulus for the world's biggest economy.Investors were also looking forward to a few large multinational companies in the US releasing their financial results overnight.