Market steadies after surge by big banks
The S&P/ASX200 Index rose 0.5 per cent for the week to close at 5411.1 points. The broader All Ordinaries Index closed up 0.39 per cent for the week to 5406.5.
The local sharemarket had been recording five-year highs in October, as the Fed confirmed market expectations this week that it would continue its $US85 billion-a-month ($89.5 billion) bond-buying program at the same pace as it waited for a sustained recovery in the US economy.
It lost some ground as investors took profits after shares in three of the four banks - Commonwealth, ANZ and Westpac - pushed to all-time highs. The National Australia Bank reported a $5.94 billion profit on Thursday, while ANZ delivered a record cash profit of $6.49 billion in the year to September.
"You have to look at it in the context of where the market has come from over the last month," said JBWere executive director Mike Kendall of the market's modest increase for the week.
"The market's moved incredibly fast and an incredibly long way. So it's going to need more fuel in the tank to keep pushing further along without it having a bit of a rest."
Apart from the banks' results, the market mulled over a report suggesting that Zurich Insurance was in talks to buy Wesfarmers' insurance business. A request by the Australian Prudential Regulation Authority for banks to limit their dividend payouts to investors to meet new rules on capital buffers also fed into market sentiment.
Patersons Securities strategist Tony Farnham said Australian banks were well capitalised and there should not be too much concern about the APRA request.
"Our banks are well-progressed towards satisfying the Basel III requirements that have to be in place by the start of 2016," he said.
"Even if APRA amped it up again and add another amount of extra capital required, I believe the banks are going to be generating enough capital internally to satisfy those requirements, particularly in an environment of low credit growth."
On Friday, the big miners continued to lose ground, despite a bigger than expected rise in Chinese manufacturing activity.
BHP Billiton dropped 13¢ to $37.53, Rio Tinto lost 45¢ to $63.54 and Fortescue was 5¢ weaker at $5.16.
David Jones was one of the best performers among the top 200 companies, adding 18¢, or 6.6 per cent, to $2.90 after quarterly sales rose 2.1 per cent.
Macquarie Group added $2.15, or 4.2 per cent, to $53.10 after its half-year profit rose by nearly 40 per cent to $501 million and its dividend was increased.
Next week Westpac will report its full-year results for 2013, with the bank forecast to record earnings of more than $7 billion.
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The Australian sharemarket closed slightly higher for the week, with the S&P/ASX200 Index rising 0.5% to 5411.1 points and the All Ordinaries Index up 0.39% to 5406.5 points.
The Australian sharemarket closed slightly higher for the week, with the S&P/ASX200 Index rising 0.5% to 5411.1 points and the All Ordinaries Index up 0.39% to 5406.5.
The big banks had a significant impact, with stellar earnings performances from Commonwealth, ANZ, and Westpac pushing their shares to all-time highs. However, the market shed some gains as investors took profits.
The big banks had a significant impact, with stellar earnings performances from Commonwealth, ANZ, and Westpac pushing their shares to all-time highs. However, the market shed some gains as investors took profits.
National Australia Bank reported a $5.94 billion profit, while ANZ delivered a record cash profit of $6.49 billion for the year to September.
National Australia Bank reported a $5.94 billion profit, while ANZ delivered a record cash profit of $6.49 billion for the year to September.
The US Federal Reserve confirmed it would continue its $US85 billion-a-month bond-buying program at the same pace, as it waits for a sustained recovery in the US economy.
Australian banks are well-capitalized and progressing towards meeting Basel III requirements by 2016. Even with potential increases in capital requirements by APRA, banks are expected to generate enough capital internally.
Australian banks are well-capitalized and are progressing towards satisfying the Basel III requirements by 2016. They are expected to generate enough capital internally to meet any additional requirements.
The big miners lost ground despite a rise in Chinese manufacturing activity. BHP Billiton, Rio Tinto, and Fortescue all saw declines in their share prices.
Despite a rise in Chinese manufacturing activity, big miners like BHP Billiton, Rio Tinto, and Fortescue lost ground, with their share prices dropping slightly.
David Jones was a top performer, with its shares rising 6.6% after a 2.1% increase in quarterly sales. Macquarie Group also performed well, with a 4.2% increase in share price following a nearly 40% rise in half-year profit.
David Jones was one of the top performers, with its shares rising 6.6% to $2.90 after reporting a 2.1% increase in quarterly sales.
Westpac is expected to report its full-year results next week, with forecasts predicting earnings of more than $7 billion.
Westpac is expected to report its full-year results next week, with forecasts predicting earnings of more than $7 billion.
Market sentiment was influenced by the Fed's decision to continue its bond-buying program, profit-taking by investors, and APRA's request for banks to limit dividend payouts to meet new capital buffer rules.
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