US rally pushes market to three-month high

The sharemarket rallied to its highest level in three months yesterday, finishing up 0.85 per cent for February, after Wall Street closed at its highest level in nearly four years.

The sharemarket rallied to its highest level in three months yesterday, finishing up 0.85 per cent for February, after Wall Street closed at its highest level in nearly four years.

The Australian dollar pushed back above US108?, closing at US108.04?, as investors anticipated a strong take-up overnight of the European Central Bank's second long-term refinancing operation for the region's banks.

The benchmark ASX 200 rose 35.8 points, or 0.8 per cent, to 4298.5, while the broader All Ordinaries gained 36.9 points, or 0.8 per cent, to 4388.1.

The ASX 200 rally means the index is up 6 per cent this year, as improved conditions in the US economy helped the Dow Jones Industrial Average break through the 13,000 barrier for the first time since May 2008.

Back then, the ASX 200 was trading near 6000 points, while the dollar was at US95?.

February also saw a strong rise in the euro, which rose from ?1.30 to ?1.34 since February 16.

On the market yesterday, every industry sector except consumer discretionaries finished positively, helped by strong gains by banks and materials stocks.

Commonwealth Bank rose 28?, or 0.57 per cent, to $49.43, as its ATM and Eftpos services were brought back online after a nationwide crash.

NAB gained 1.63 per cent, up 38?, to $23.67. Westpac rose 1.06 per cent, up 22? to $20.90. ANZ rose 7? to $21.95.

The City Index chief market analyst, Peter Esho, said markets in the Asia-Pacific region were strong yesterday. He said the local bourse was boosted by favourable economic data from Japan and South Korea, and by Australian retail sales data that showed a lift on the previous month and was in line with expectations.

"Despite a lot of companies going ex-dividend today, our market still managed to climb nearly 1 per cent - that's a pretty bullish sign for our market," Mr Esho said.

Yesterday the Japanese government said that Japan's factory production had risen for a second straight month, boosted by car and camera manufacturing. Figures from South Korea showed that its industrial output unexpectedly rose by 3.3 per cent in January, easing fears of an economic slowdown.

The rally in the price of gold - it rose US$45 an ounce last month - helped Newcrest Mining gain 18?, to $33.49, while Kinsgate Mining rose 1.48 per cent, up 10?, to $6.86. In the big miners, BHP Billiton was up 35? to $36.10, while rival Rio Tinto was down 25? to $67.45.

Retail sales figures for January showed domestic spending grew 0.3 per cent, compared with the same month a year earlier, in seasonally adjusted terms. It was the best result since September, helping to claw back some of the losses from the 0.1 per cent fall in December.

For the year to January, the retail sector grew 2.7 per cent - well below its average for the previous 10 years of 4.9 per cent - prompting analysts to suggest consumers could play a bigger role in economic activity this year.

"Consumer spending has accelerated over the past year, [it is] just not fully captured by the monthly retail sales report," the head of Asia-Pacific Research at TD Securities, Annette Beacher, said.

"Hence this strong start to 2012 hints that the consumer could be a stronger contributor to gross domestic product growth this year than previously thought, especially as the Australian dollar is set to remain stronger for longer.

Insurer QBE gained 1.7 per cent, up 15?, to $11.65, after institutional investors stumped up $450 million to replace its tier two convertible debt.

Related Articles