Shares have rallied for a second day as a well-received earnings update from BHP helped offset weakness in yield sectors.
At lunchtime the ASX 200 was 17 points or 0.3% ahead at 5925 with the Big Australian driving gains after beating analysts' expectations for its first-half profit despite the recent collapse in iron ore and oil. The interim dividend was increased to 62c from 59c last year. Shares in the company were lately up 2.6% after earlier touching a three-month high.
Unsurprisingly, the metals & mining sector led the sector gains with a rise of 1.6%, followed by materials +1.2% and health +0.7%. Yield sectors were out of favour, with consumer staples down 0.6%, telecoms 0.5%, utilities 0.5% and property trusts 0.3%.
The market's barn-storming start to the year prompted Citi strategist Tony Brennan to upgrade his end-of-year target for the index to 6300 from an earlier prediction of 5850.
"We had envisaged renewed gains for the market after last year, but not this quickly, and underpinned by a return to earnings growth, with resources earnings having been re-based,” Brennan said in a research note to clients quoted on Fairfax.
Hong Kong's Hang Seng dropped 0.29% and Japan's Nikkei added 0.12%. China's Shanghai Composite remained shuttered for the Lunar New Year holiday. Dow futures were recently three points or less than 0.1% lower.
Crude oil futures edged up four cents this morning to US$49.49 a barrel. Spot gold firmed $2.40 to US$1,203.20 an ounce. The dollar was buying 78.07 US cents.
Respect to BHP management. The prices of the company's main commodities are all down yet they remain so profitable they can afford to increase the dividend. Trading: I won't be increasing my dividend payouts based on this morning's performance. The profits have come fairly easily for the last week and a half but I'm currently nursing paper losses in MRM, TPI and HIL. My success rate is usually higher than nought from three. Still time for all to come good, of course. No room for pessimism in this game.
