Westpac joins $100b club as market rises
The benchmark S&P/ASX 200 jumped 86.2 points, or 1.7 per cent, to 5102.4, its biggest one-day gain in more than a month as investors bet that lower than expected inflation data would trigger another rate cut by the Reserve Bank. The broader All Ordinaries added 81.6 points, or 1.6 per cent, to 5084.2.
The financial sector was the biggest driver, surging 2.1 per cent, as investors chased higher-yielding stocks. Westpac is just the third company after BHP Billiton and Commonwealth Bank to be worth more than $100 billion, with its market capitalisation reaching $100.9 billion after the day's rally.
Westpac shares pushed up 2.5 per cent to $32.50, a record high. Commonwealth Bank shares also hit a record high, jumping 2.4 per cent to $71.70, which took the bank's market capitalisation to $115 billion. Discounting BHP's London shares, CBA is the biggest stock on the local market.
ANZ and NAB also had strong gains, rising 2.2 per cent to $29.90 and 2.2 per cent to $32.76 respectively. "It's all about yield. Look at the big four banks, Telstra, all up, really strongly," said RBS Morgans senior trader Luke McElwaine.
Telstra shares added 0.8 per cent to finish at $4.88, their highest point since February 2008.
The Nikkei closed 2.3 per cent higher and China's benchmark CSI300 rose as much as 2.5 per cent.
There were no flow-on effects from a mini-crash on Tuesday in the US. The sudden drop was sparked by a fake tweet that was sent out under the Associated Press account, which said there had been explosions at the White House. US stocks plunged about 1 per cent, before recovering on news it was a fake tweet.
Local shares also enjoyed a boost from inflation figures that came in lower than expected. Inflation increased 0.4 per cent quarter-on-quarter and 2.5 per cent year-on-year.
The Australian dollar continued to trade a little above a six-week low of $US1.0221, reached on Tuesday.
Frequently Asked Questions about this Article…
Westpac topped $100 billion after a broad-based sharemarket rally led by the big banks. Shares rose 2.5% to a record $32.50 on the day, lifting Westpac's market capitalisation to about $100.9 billion. The rally was driven by investors reacting to lower-than-expected inflation data and chasing higher-yielding bank stocks.
Westpac and Commonwealth Bank both hit record highs during the rally — Westpac at $32.50 and Commonwealth Bank up 2.4% to $71.70. The lift in bank shares pushed Commonwealth Bank's market capitalisation to about $115 billion.
Inflation came in lower than expected — rising 0.4% quarter-on-quarter and 2.5% year-on-year — which boosted investor hopes for another Reserve Bank rate cut. The benchmark S&P/ASX 200 jumped 86.2 points (1.7%) to 5102.4, its biggest one-day gain in over a month.
The financial sector surged 2.1% as investors chased higher-yielding stocks. All of the big four banks saw strong gains: Westpac, Commonwealth Bank, ANZ (up 2.2% to $29.90) and NAB (up 2.2% to $32.76). The rally reflected yield-seeking behaviour after the inflation surprise.
Telstra shares rose 0.8% to finish at $4.88, marking their highest level since February 2008 as part of the broader lift in yield-sensitive stocks.
Yes — Japan's Nikkei closed 2.3% higher and China's CSI300 rose as much as 2.5%. The article also noted a US mini-crash earlier in the week that did not produce flow-on effects for local markets.
The US drop was triggered by a fake tweet sent from an account posing as the Associated Press claiming explosions at the White House. US stocks plunged about 1% before recovering, and the article states there were no flow-on effects to local Australian shares.
After the rally, Westpac joined BHP Billiton and Commonwealth Bank as the only local stocks worth more than $100 billion. The article notes Commonwealth Bank is the biggest stock on the local market if you discount BHP's London-listed shares.
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