Date February 5, 2015

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Patrick Commins, Jens Meyer

Thanks for reading and your comments.

See you all again tomorrow morning from 9.

 

4:52pm: A surge from index heavyweight Commonwealth Bank and a solid start to earnings season helped the Australian sharemarket post its eleventh straight day of gains.

The benchmark S&P/ASX 200 rose 33.7 points, or 0.6 per cent to 5811, the highest close since May 2008. The broad-based All Ordinaries gained 31.8 points, or 0.6 per cent to 5756.5.

Since the start of the rally on January 21, the ASX 200 has surged 9.5 per cent higher.

We’ve had a very positive start to February and it’s following an adage which has become very synonymous the market rally over the last five years and that is ‘don’t fight the central banks’, Perpetual head of equities Matt Sherwood said.

Investors, at the moment, seem to be focused on earnings certainty and security in a world where macro dynamics are probably less egregious than what people thought going into 2015.

The market has led forward by banks, which extended their run higher as investors continue to hunt for yield thanks to the Reserve Bank of Australia’s rate cut on Tuesday and the prospect of a further rate cut this year. Three of the big four closed at all-time peaks, while NAB ended at a seven-year high.

We find that the Aussie equity market was not crying out for lower rates as it has done so in the past, Credit Suisse analyst Hassan Tevfik said.

Earnings per share [were] growing going into this rate cut. It is usually contracting. Meanwhile, valuations were higher than normal. We believe Aussie equities are benefitting from the free ride provided by the RBA as it stimulates to support domestic demand and help close the output gap.

Among the other banks, Commonwealth Bank of Australia was one of the biggest drivers of the market and was responsible for more than half the gains on the ASX200 on Thursday, jumping 2.7 per cent to $93.27, a new record high. CBA now has a market capitalisation of more than $150 billion.

ANZ and Westpac also hit new record highs, gaining 1 per cent to $34.98 and 0.6 per cent to $36.44 respectively. Another high-yield stock, Telstra pushed to a fresh 14-year high, lifting 1.1 per cent to $6.67.

National Australia Bank reported quarterly earnings of $1.65 billion for the three months to December, a 6 per cent increased on the previous period. The bank also announced it will cut its standard variable mortgage rate by 28 basis points more than the 25 basis points passed down by Commonwealth Bank of Australia and Westpac after the Reserve Bank of Australia cut rates on Tuesday. NAB shares jumped 1.3 per cent to $36.97 — a seven year high.

Financials helped offset losses in the mining and energy sector. After surging more than 20 per cent in four sessions, the price of oil pulled back strongly, slumping 6 per cent to $US54.42 per barrel.

4:39pm: And here are today’s winners and losers .

Flexigroup shares took off after their half-year earnings announcement, while BC Iron shook off a falling iron ore price to post an 11.8 per cent gain, as did Arrium. up 4.7 per cent.

Echo continued to bask in the glow of their recent earnings result, up 5.1 per cent.