Shares rose for the fifth consecutive day on some strong local earnings reports, stronger than expected Chinese trade data and after global markets cheered new United States Federal Reserve chair Janet Yellen pledge to take a ‘measured’ approach to cutting stimulus.
The benchmark S&P/ASX 200 Index rose 55.6 points, or 1.1 per cent, to 5310.1, while the broader All Ordinaries Index added 1 per cent to 5319.8, buoyed by a slew of half-year earnings results that met or beat expectations while a number of company’s said the outlook for the second half of the year is improving.
Local shares had a strong lead after all major equity markets in the United States added more than 1 per cent. Global investors were cheered after Dr Yellen pledged in a highly anticipated speech to continue taking “a measured approach” to the process of reducing the central bank’s monthly stimulus – currently $US65 billion per month down from $US85 billion per month in December.
Major markets in Britain and Europe also moved higher on Tuesday night, while Asian shares provided further support in afternoon trading on Wednesday.
But Angus Tulloch, a senior portfolio manager for Edinburgh based funds manager First State Stewart warned the withdrawal of US central bank stimulus is likely to remain a source of concern for investors for the duration of the year.
“Stockmarkets will continue to be difficult while the US Federal Reserve continues to taper its asset purchases. Most investors have probably underestimated just how much volatility and selling that will cause in 2104,” Mr Tulloch said.
A bumper result from the biggest stock on the local stock exchange was good for sentiment. Commonwealth Bank of Australia beat high expectations to post a record half-year profit of $4.27 billion, up 14 per cent on the previous corresponding period. CBA also pleased investors by lifting its interim dividend more than anticipated, up 12 per cent from the previous half to $1.83 per share. The stock added 0.4 per cent to a three-month high of $76.20.
ANZ Banking Group lifted another 1.4 per cent to $30.98, after its quarterly a trading update delivered on Tuesday met profit growth expectations and showed a bigger than expected reduction in bad debts.
Among the rest of the big four banks, Westpac Banking Corporation and National Australia Bank each rose 0.8 per cent to $32.50 and $34.15 respectively.
The biggest resource stocks lifted after a report from China’s National Bureau of Statistics showed Australian exports to China grew 41.5 per cent last month compared to January 2013, as the world’s second largest economy imported increasing volumes or iron ore, grain and liquified natural gas.
Resources giant BHP Billiton did the most to lift the bourse, rising 1.8 per cent to $37.20. Main rival Rio Tinto added 2.2 per cent to $68.10 despite the spot price for iron ore, landed in China, extending into a third week of declines at $US120 a tonne.
Telstra Corporation gained 1.2 per cent at $5.11 ahead of reporting its half-year results on Thursday.
Information technology was the best-performing sector, up 5 per cent, as Computershare and Carsales each climbed more than 6 per cent on solid half-year results.
Digital share registry service provider Computershare climbed 6.4 per cent to $11.80 as chief executive Stuart Crosby announced his resignation from June 30 and named chief information officer Stuart Irving as his successor. The announcement was made as Computershare showed half-year net profit jumped 47.4 per cent from the previous corresponding period.
Online automotive advertiser Carsales jumped 6.6 per cent to $10after showing a 17 per cent jump in interim net profit from the previous corresponding period.
Copper, gold and silver miner Oz Minerals was the best-performing stock in the ASX 200, soaring 12.7 per cent to $3.83 despite reporting a full-year loss of $294 million. Analysts endorsed a decision by managing director Terry Burgess to resign and investors were cheered that the company maintained its dividend payout ratio while lifting production guidance.
“Although reporting season has just begun, it is already clear that the market is not going to be able to deliver strongly on the much desired growth in company earnings until 2015,” Celeste Funds Management analyst Paul Biddle said. “Expect to see overall analyst expectations for the market’s growth in earnings per share to be trimmed by up to 5 per cent at the end of February.”
Labour hire contractor Skilled Group climbed 9.6 per cent to $3.09, after showing half-year net-profit after tax declined 24.7 per cent but saying things were set to improve this half. The result was in line with expectations given the well documented slowdown in demand from mining investment.
Fast food chain Dominos Pizza Enterprise advanced 12.4 per cent to $19.25 after lifting its earnings forecasts and plans for new store openings in 2014. The pizza maker reported a 38.8 per cent rise in net profit for the period ending December 31 following its acquisition of Domino’s Japan.
Stockland Property Group lifted 4.8 per cent to $3.90 after an uplift in residential sales helped buoy statutory profit by 34 per cent compared to the first-half of 2013. The developer also lifted its forward earnings guidance.
The uptick in housing construction also helped building materials supplier Boral show a 73 per cent rise in underlying half-year profit, despite reporting a $26.3 million net loss for the period. The result was in line with expectations after the company updated its guidance last week. Boral shares gained 9 per cent to $5.45.
The Westpac/Melbourne Institute consumer sentiment index unexpectedly dropped 3 per cent in February to 100.2, marginally above the line that shows optimists outweigh pessimists. Economists said people might have grown more cautious ahead of expected cuts to the Federal Budget.
Healthcare was the worst-performing sector, down 2 per cent, as CSL and Primary Health Care both fell despite reporting profit growth.
Plasma and vaccine manufacturer CSL fell 3 per cent to $67.75 after beating analyst expectations to show a 3 per cent rise in interim net profit to $715 million. The company said its more recent foray into products used to stem bleeding during surgery would continue to be a source of growth.
Medical centre and pathology clinic operator Primary Healthcare fell 2.4 per cent to $4.81, despite showing a 8.6 per cent rise in half-year net profit.
Packaged foods distributor Goodman Fielder was the worst performer among the top 200 stocks, shedding 7.4 per cent to 63 cents after reporting a $64.8 million half-year loss, in part due to pressure from record milk and rising wheat prices. Significant earnings improvement was forecast for the current half-year period.
Retail electricity and gas supplier AGL Energy rose 3.2 per cent to $15.66 after announcing a $1.2 billion equity raising to fund a $1.5 billion takeover of Macquarie Power Generation. The deal is still subject to approval from the competition regulator.
Embattled resources sector services contractor Forge Group, which has been one of the most volatile stocks in the index over the past quarter, announced it has appointed an administrator.
This story Administrator ready to work first appeared on Nanjing Night Net.