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.
Frequently Asked Questions about this Article…
Why did the ASX 200 rally to a three-month high?
The ASX 200 rose to its highest level in three months after gains on Wall Street lifted sentiment, the Dow pushed past the 13,000 mark, and stronger economic data across the Asia‑Pacific region supported markets. Locally, banks and materials stocks led the move and the index finished up 35.8 points (about 0.8%) to 4,298.5, leaving the ASX 200 roughly 6% higher year‑to‑date.
How did major Australian bank shares perform and what happened with Commonwealth Bank's services?
Bank shares were among the top performers. Commonwealth Bank rose to $49.43 after its nationwide ATM and Eftpos services were restored following a crash. NAB climbed to $23.67, Westpac to $20.90, and ANZ traded around $21.95, reflecting broad strength in the financial sector on the day.
Which sectors led the market rally and were any sectors weak?
Banks and materials stocks provided the biggest boosts and every industry sector finished positively except consumer discretionary, which was the only sector that didn’t post gains on the day.
How did gold and the big miners affect market moves?
A rally in the gold price—gold rose about US$45 an ounce last month—helped gold miners. Newcrest Mining reached $33.49 and Kinsgate Mining was around $6.86. Among the big diversified miners, BHP Billiton was trading near $36.10 while Rio Tinto was about $67.45.
What did Australia’s retail sales data show and why does it matter to investors?
January retail sales rose 0.3% compared with the same month a year earlier in seasonally adjusted terms—the best monthly result since September. For the year to January, the retail sector grew 2.7% (below the 10‑year average of 4.9%). Analysts in the article said this start to 2012 hints consumers could play a stronger role in GDP growth, which is an important consideration for investors in consumer‑facing and domestic growth stocks.
How did currency and global monetary factors influence the market?
The Australian dollar pushed back above US108, closing at US108.04, as investors anticipated strong take‑up of the European Central Bank’s long‑term refinancing operation. The euro also rose from about €1.30 to €1.34 since mid‑February, all of which supported local market sentiment and exporters/miners differently depending on their currency exposure.
What was the market reaction to regional economic data from Japan and South Korea?
Positive surprises from the region helped lift sentiment: Japan’s factory production rose for a second straight month (boosted by car and camera manufacturing) and South Korea’s industrial output unexpectedly rose 3.3% in January. City Index analyst Peter Esho noted these favourable data points helped bolster the local bourse.
Why did insurer QBE’s shares rise, and what corporate action was reported?
QBE climbed to about $11.65 after institutional investors provided $450 million to replace its tier‑two convertible debt. That backing by institutional investors was cited in the article as a positive development for the insurer’s capital position and was reflected in the share move.
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