MARKET CLOSE (4.30pm AEDT)
The local market managed to hold fast to its gains recorded at lunch, with the All Ordinaries Index (XAO) rising by 0.9 per cent or 43 pts to 5024.5. The XAO along with the ASX 200 index (XJO) both closed above the 5000.0 point mark; something which hasn't happened in years. In fact, today was the highest close for the XJO since September 2008.
Almost all sectors finished higher, with the mining, industrial and financial industries the standouts. Improvements in these sectors lifted the rest of the market higher today. The miners in addition to the financial sector account for over 60 per cent of all Australian shares. Rio Tinto (RIO), the iron ore focused miner is up 2.07 per cent or $1.43 to $70.46, Fortescue Metals (FMG) is 3.61 per cent or 18 cents higher to $5.17 while the larger BHP Billiton (BHP) ended 0.88 per cent or 33 cents higher to $37.92.
The major banks were the biggest improvers at lunch and not much changed in the second half of the day. Australia's largest lender, Commonwealth Bank (CBA) rose strongly following its first half (July to December 2012) earnings and a significant increase in its next dividend payment. CBA shares rose 2.43 per cent or $1.59 to $67.11 while Westpac (WBC) gained by 2.09 per cent or 58 cents to $28.33. National Australia Bank (NAB) jumped by 1.24 per cent or 36 cents to $29.29 and ANZ Banking Group (ANZ) edged higher by 0.91 per cent or 25 cents to $27.81. The financial sector is up 9.86 per cent since the start of 2013.
Amongst those companies that reported, pharmaceutical company, CSL Limited (CSL) ended down just 0.05 per cent or 3 cents to $57.21, share registry Computershare (CPU) slipped by 0.2 per cent or 2 cents to $10.05, Boral (BLD) rose by 1.03 per cent or 5 cents to $4.92 and Noni B (NBL) jumped by 3.87 per cent or 3 cents to 80.5 cents. However, construction giant Leighton Holdings (LEI) was the biggest winner after rising by 11.2 per cent or $2.33 to $23.14. LEI announced a $448m Full Year Underlying Profit for the previous calendar year. Underlying Profit is often considered a more accurate representation of performance and was towards the high end of expectations. Leighton Contractors & Thiess contributed over 60% of its total revenue. The successful sale of its Waste Management business generated a net profit of $81m. LEI, Australia's 5th biggest employer declared a 60c per share dividend, scheduled to be paid out to eligible shareholders on 28 March. The ex-dividend date is 7 March. LEI shares are up 29% since the start of January, however are coming off three tough years of losses. Investors reacted well to LEI´s outlook for the current year; a profit of between $520 and $600 million for 2013 and goal of improving its debt position. The increase in profit is partly reliant on continued growth in China and broader Asian region. It continues to look for a buyer of its Telecommunication Infrastructure Business.
The latest monthly Westpac/Melbourne Institute index of consumer confidence today showed that Australians are feeling significantly more upbeat about their finances now than just a month ago. CommSec Economist, Savanth Sebastian said that "Not only did the confidence reading rise to its highest levels in over two years, but all five of the sub-components of the index recorded healthy gains. It is important to realise that confidence is a fragile commodity and keep in mind the latest improvement comes after a period where everything has gone right over the past couple of months. A healthy Aussie dollar, rising share markets, rising house prices, and a robust improvement in the outlook for the global economy have supported confidence levels."
The volatile lending finance report was also issued today and showed a healthy 4.1 per cent rise in total lending over December. Mr Sebastian went on to say that "The lending data suggests, the economy is improving off a low base. Overall lending finance was modestly higher than a year ago, largely driven by commercial finance which surged by almost 9 per cent in December. The weakness in the latest result was centred on lease and housing finance, however there have been clear signs that the housing sector is steadily gathering momentum - a result that should support broader economic growth."
No major market moving data was issued in the region today, however the public holidays continued due to the Lunar New Year.
In Europe tonight, the monthly industrial production report will be issued at 9pm (AEDT) along with a 10-year Italian bond auction. The Bank of England Governor will be delivering a talk later in the evening. The Bank of England is the British equivalent to Australia's Reserve Bank.
In the U.S, the market will be focused on the January reading of retail spending. Most Economists are expecting a modest 0.3 per cent rise in sales over the month. This is one of the more important pieces of economic information issued this week. The latest import and export price data will also be released.
Looking ahead to tomorrow, no major economic news is scheduled for release. On the earnings front however, Adelaide Brighton, Alumina (one of the most shorted companies on the local market), Downer EDI, GPT, Mirvac, Rio Tinto, Sai Global, Wesfarmers, the ASX, Whitehaven Coal and Paladin Energy will all be issuing their profit numbers.
Volume of shares traded came in at a substantial 1.78 billion today, worth $5.1 billion. 553 shares were up, 448 were weaker and 357 ended unchanged.
At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is up 0.61 per cent or 30 pts to 4956.
Due to the end of daylight savings in Europe, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures are currently pointing to rise at the start of trade tonight in Europe.
U.S futures are also pointing to a slight improvement on the open tonight. Due to the start of daylight savings in Australia and its end in the U.S, American markets will now be trading between 1.30am (AEDT) and 8am (AEDT).
Turning to currencies, the Australian dollar (AUD) buys US103.3 cents, is trading at £65.9 pence and €76.8 cents.
Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.
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