Healthy earnings put bounce in bourse
The benchmark S&P/ASX 200 jumped 67.5 points, or 1.3 per cent, to 5104.1, its highest close since September 2008, while the broader All Ordinaries gained 67.3 points, or 1.3 per cent, to 5120.4.
Among the sectors, energy surged 2.8 per cent, consumer staples rose 2 per cent, financials added 1.3 per cent and materials pushed up 1.1 per cent.
The strong gains were supported by healthy earnings results as well as positive leads from world markets after US Federal Reserve chairman Ben Bernanke reinforced that the country's quantitative easing program would continue.
For the month, the S&P/ASX 200 was 4.6 per cent higher with the biggest contributors consumer staples stocks and financials, up 9.7 per cent and 6.5 per cent respectively.
Equities strategist at Bank of America Merrill Lynch Joshua Kirkwood said share prices were pointing to a reporting season that has produced results above expectations.
"It's clear [companies have] been managing their profit margin very closely," he said. "The question for investors will be 'is that reprieve on margins sustainable?"'
Mr Kirkwood said a positive sign from the profit results over the past month was that dividends have been better than expected.
"One interpretation is that management are reasonably confident that earnings recovery will ultimately come through because they've been happy to pay more dividend this time," he said.
Among companies reporting results on Thursday, supermarket giant Woolworths said its first-half profit jumped 19 per cent to $1.15 billion. As a result its shares added 2.7 per cent to $34.93. Investors also rewarded rival Wesfarmers, up 1.3 per cent to $41.03, its highest point since June 2007.
Harvey Norman reported a 36 per cent drop in half-year profit to $81.9 million. Despite this, its shares surged 9.2 per cent to $2.49.
Treasury Wine Estate shares jumped 8.2 per cent to $5.30 after the wine company's first-half profit jumped 30.8 per cent to $52.3 million.
Miners enjoyed a good run on Thursday, Rio Tinto rose 1.6 per cent to $67.05, BHP gained 1 per cent to $37.07 and Fortescue Metals added 2.6 per cent to $4.72.
Among financials, Commonwealth Bank pushed up 1.9 per cent to $67.27, Westpac jumped 1.9 per cent to $30.77, ANZ rose 1.6 per cent to $28.72 and NAB nudged up 0.6 per cent to $30.20.
Frequently Asked Questions about this Article…
The S&P/ASX 200 jumped 67.5 points (1.3%) to 5,104.1 — its highest close since September 2008 — driven by healthy earnings results across many companies and positive global leads after US Fed chair Ben Bernanke reinforced that quantitative easing would continue. Strong sector performances also helped push the market higher.
On the day, energy surged 2.8%, consumer staples rose 2.0%, financials added 1.3% and materials gained 1.1%. For the month the S&P/ASX 200 was up 4.6%, with consumer staples and financials the biggest contributors — up about 9.7% and 6.5% respectively.
Reporting season produced results above expectations, with companies managing profit margins and paying better‑than‑expected dividends. Analysts noted that stronger-than-expected dividends may signal management confidence in an earnings recovery, which supported share prices across the market.
Bernanke’s reinforcement that the US quantitative easing program would continue provided positive leads from global markets, which supported the local rally and helped boost investor sentiment on the ASX.
Supermarket giant Woolworths reported a 19% increase in first‑half profit to $1.15 billion and saw its shares rise 2.7% to $34.93. Rival Wesfarmers was also rewarded by investors, rising 1.3% to $41.03 — its highest point since June 2007, according to the article.
Harvey Norman reported a 36% drop in half‑year profit to $81.9 million, yet its shares surged 9.2% to $2.49. The article reports this market reaction but does not provide a specific explanation for the share price rise.
Miners enjoyed gains: Rio Tinto rose 1.6% to $67.05, BHP gained 1.0% to $37.07 and Fortescue Metals added 2.6% to $4.72. Among banks, Commonwealth Bank pushed up 1.9% to $67.27, Westpac jumped 1.9% to $30.77, ANZ rose 1.6% to $28.72 and NAB nudged up 0.6% to $30.20.
The key takeaways from the article are that earnings have generally beaten expectations, dividends have been stronger than anticipated, and companies appear to be managing margins closely. Investors should follow whether the recent margin improvements are sustainable, since margin sustainability was highlighted as an open question by market analysts.
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