Shares resume rally as investors chase high yields
The ASX started February with a bang after a jump in iron ore prices helped the miners surge higher on Friday, with BHP Billiton gaining 1.2 per cent and Rio Tinto 1.3 per cent.
But analysts have cautioned that the market is due for a pullback, after January saw the longest winning streak on the S&P/ASX 200 index in more than a decade.
More than $75 billion has now been added to the value of the country's 200 biggest companies since the start of the year. It is the third time in four years the All Ords has tried to break 5000 points.
For the week, the benchmark S&P/ASX 200 rose 85.9 points, or 1.8 per cent, to 4921.1 points, while the All Ords rose 83.1 points, or 1.7 per cent, to 4941.9 points.
The market defied global trends on Friday after strong US earnings helped the market close at its highest level since April 11, 2011.
CMC Markets chief strategist Michael McCarthy said local investors were feeling more optimistic after a strong showing from US corporates. "We've had a much more positive season in the US and that I think has got local investors more optimistic about the earnings outlook," he said.
"We've also got a lot of people who are more overweight [in] cash and they've seen their neighbours earn a lot on the market and they're getting a bit nervous about not being in it."
At 5pm on Friday, the Australian dollar was trading at US103.99¢, down from US104.06¢ on Thursday.
On Friday, Aquila Resources was steady at $3.12 after the company got the green light from the West Australian government to develop Anketell Port as part of its $6 billion iron ore project.
Brickworks slipped 2¢ to $12.60, after the company said it expected a rise in its first-half earnings after selling a parcel of its land in western Sydney to a trust it part owns with the property developer Goodman Group.
Cabcharge rose 1¢ to $4.93, after the taxi payments operator bought Queensland taxi company Maxi Taxi for less than $5 million.
Kathmandu Holdings rose 8¢ to $1.85, after the adventure-wear retailer upgraded its profit forecast after better-than-expected sales in the first half of the financial year.
Pharmaxis rose 3.5¢ to 71.5¢, even though it had $175 million wiped off its market value after suffering a setback in getting its cystic fibrosis drug approved for use in the US.
Qantas Airways was up 1¢ at $1.54, as unions made a last-ditch plea to the consumer watchdog against a controversial partnership between Qantas and Emirates airlines.
Virgin Australia shares shed 0.5¢ to 42.5¢, after shareholders in Tiger Airways approved Virgin's proposal to buy a major stake in the budget airline.
Westfield Group rose 11¢ to $11.29, after the shopping centre developer said it expected to pay its security holders a distribution of 24.75¢ for the first half of the 2012-13 financial year.
with wire services
Frequently Asked Questions about this Article…
The ASX rally was driven by investors chasing high-yielding stocks and a jump in iron ore prices that lifted miners. Strong US corporate earnings also boosted local sentiment. Over the week the S&P/ASX 200 rose 85.9 points (1.8%) to 4,921.1 and the All Ordinaries rose 83.1 points (1.7%) to 4,941.9, with more than $75 billion added to the value of Australia’s top 200 companies since the start of the year.
Analysts cautioned the market could be due for a pullback after January produced the longest winning streak on the S&P/ASX 200 in more than a decade. That warning suggests investors should be aware that rallies can pause or reverse, although the article does not offer personal financial advice.
A jump in iron ore prices helped miners push higher, supporting the broader market. The article notes BHP Billiton gained about 1.2% and Rio Tinto about 1.3% on the day, contributing to the ASX’s gains.
For the week the benchmark S&P/ASX 200 rose 85.9 points (1.8%) to 4,921.1 points, while the All Ordinaries rose 83.1 points (1.7%) to 4,941.9 points. The All Ords has tried to break the 5,000-point mark three times in the last four years.
Several company-specific stories featured: Aquila Resources got approval for the Anketell Port as part of a $6 billion iron ore project (shares around $3.12); Brickworks sold land in western Sydney to a trust it part-owns with Goodman Group and expects higher first-half earnings (shares slipped to $12.60); Cabcharge bought Maxi Taxi for under $5 million (rose to $4.93); Kathmandu upgraded its profit forecast after strong sales (rose to $1.85); Pharmaxis saw $175 million wiped off market value after a US drug approval setback but its shares rose to 71.5¢; Qantas rose amid unions’ appeal over a partnership with Emirates; Virgin Australia fell after Tiger Airways shareholders approved Virgin buying a major stake; and Westfield said it expects a 24.75¢ distribution (shares rose to $11.29).
Aquila Resources received approval from the Western Australian government to develop Anketell Port as part of its $6 billion iron ore project. The stock was steady at about $3.12 following the announcement.
Strong US earnings helped lift investor optimism in Australia, according to CMC Markets’ chief strategist Michael McCarthy, which supported local markets. At 5pm on Friday the Australian dollar was trading at about US103.99¢, marginally down from US104.06¢ on Thursday.
The article reports more than $75 billion has been added to the value of the country’s 200 biggest companies since the start of the year. For everyday investors, that highlights the scale of the recent rally and helps explain why some investors who are overweight cash may feel pressure to re-enter the market—but analysts still warn a pullback is possible.
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