Miners, banks lead market's rebound

THE sharemarket has hit 19-month highs after strong gains among the big miners and retail banks.

By InvestSMART · 4 Jan 2013

By InvestSMART ·
4 Jan 2013

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THE sharemarket has hit 19-month highs after strong gains among the big miners and retail banks.

The benchmark S&P/ASX 200 Index rose 34.8 points, or 0.74 per cent, to 4740.7 on Thursday.

It was the S&P/ASX 200's highest close since it finished the local trading day at 4756.4 on May 19, 2011.

The local market opened up 0.4 per cent, following a strong lead from Wall Street, and extended gains through the day with investors buoyed by the deal over the US fiscal cliff and firmer commodities prices during the overnight session.

Positive data from China also lifted sentiment on equities markets.

Resource-related sectors were among the best performers.

The gold sector climbed 2.73 per cent, metals and minerals companies rose 1.64 per cent and the materials sector advanced 1.5 per cent, according to IRESS data. BHP Billiton rose 31? to $38.15, while Rio Tinto was $1.63 firmer at $69.25.

Financial stocks were 0.41 per cent higher, with the four big retail banks posting gains.

ANZ climbed 9? to $25.18, CBA advanced 52? to $63.24 - a record closing high - NAB rose 15? to $25.25 and Westpac was 9? firmer at $26.19.

"Regional equities are seeing a continuation of the buoyant risk environment in Asia today as investors react to the passing of the fiscal cliff deal," IG markets strategist Stan Shamu said in a research note. "Although some analysts feel this is merely a relief rally as US leaders kick the can down the road, so to speak, it seems to have done the job for now."

IAG said it had raised its catastrophe reinsurance program to $5 billion for 2013, from $4.7 billion in 2012. IAG was up 3? at $4.72.

Brambles rose 10? to $7.69 after the pallet company said it had completed the ?135 million acquisition of intermediate bulk container company Pallecon.

The spot price of gold in Sydney finished at $US1686.43 an ounce, up $US6.25.

Nomura's head of fixed income, Jon Linton, said the local bond market was waiting for direction from overseas markets, especially the US, during the overnight session.

"There isn't much happening locally so I think our market is really in hands of global markets," Mr Linton said.

"We will wait and see what the US does."

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Frequently Asked Questions about this Article…

Why did the ASX 200 hit 19‑month highs today?

The S&P/ASX 200 rose 34.8 points (0.74%) to 4,740.7, its highest close since May 19, 2011. Investors were lifted by strong gains in big miners and retail banks, a favourable lead from Wall Street, the US fiscal‑cliff deal, firmer commodity prices overnight and positive data from China.

Which sectors led the market rebound and how did they perform?

Resource‑related sectors led the rally: the gold sector climbed 2.73%, metals and minerals companies rose 1.64% and the broader materials sector advanced 1.5%. Financial stocks were also higher, up about 0.41%.

How did big miners such as BHP Billiton and Rio Tinto perform?

Major miners were among the best performers. BHP Billiton closed at $38.15, while Rio Tinto finished at $69.25 (about $1.63 firmer). These moves helped drive the overall market lift.

What happened to the big four banks during the rebound?

All four big retail banks posted gains. ANZ closed at $25.18, Commonwealth Bank (CBA) hit a record closing high at $63.24, NAB finished at $25.25 and Westpac closed at $26.19.

What did the gold market do and what was the spot price in Sydney?

Gold performed strongly alongside resource stocks. The gold sector rose 2.73% and the spot price of gold in Sydney finished at US$1,686.43 an ounce, up US$6.25.

Were there company‑specific news items investors should note?

Yes. IAG said it raised its catastrophe reinsurance program to US$5 billion for 2013 (up from US$4.7 billion in 2012) and IAG shares were higher at $4.72. Brambles completed a €135 million acquisition of intermediate bulk container company Pallecon and its shares closed at $7.69.

What did market strategists say about the rally’s drivers?

IG Markets strategist Stan Shamu said regional equities were buoyant as investors reacted to the passing of the US fiscal‑cliff deal. He noted some analysts view the move as a relief rally, but for now it has boosted risk‑on sentiment in Asia and Australia.

What’s the outlook for Australian bonds and what should investors watch?

Nomura’s head of fixed income, Jon Linton, said the local bond market is largely waiting for direction from overseas markets—especially the US—because there wasn’t much domestic news driving rates. Everyday investors should watch overseas sessions for signals that could move local bonds.