Bourse ignores vital statistics as All Ords breaches 4200 Kevin Andrusiak March 05, 2005
IT was a week of defiance for the Australian share market as the broad All Ordinaries index smashed through the 4200 mark for the first time.
At the close of trade yesterday, the All Ords was at 4201.9, up 16 points for the day and a stunning 85.5 points, or 2 per cent, in a week in which the pundits expected to see the market go backwards.
Not only did it survive countless wounds from a stream of poor economic data, but it marched on to new record levels, touching an intra-day high of 4228.7.
Neither high oil prices, an interest rate rise, poor trade and retail sales figures nor weak international leads could slow the market.
Bank stocks, which account for 30 per cent of the market, and News Corporation were the big engine behind yesterday's rise, countering slides in big resource stocks.
Westpac senior economist Andrew Hanlan said the soaring market was evidence there was some kind of disconnection between the equities market and the spate of poor economic indicators.
"It's as if investors haven't heard the economy stalled in the second half of 2004," Mr Hanlan said. "Company profits generally have being doing well and the international bedrock is still very favourable, so the good market conditions are there.
"But, if the Reserve Bank does decide to raise interest rates in April or May, it would take the heat out of the equity market."
The glow behind the share market is being generated by a booming resources and energy sector.
Through rising commodity prices, mining and energy companies such as Rio Tinto, BHP Billiton and Santos have helped to fuel the upward trend.
Other blue-chip stock, including banking and media stocks, also fanned the flames.
Director of trading at online trader CMC Group, Brian Griffin, said the poor data that saturated the economy this week had already been factored in to the market as most people had known it was coming for some time.
"I think the market took it (the poor economic data) on the chin," Mr Griffin said. "It is not as if it came as a surprise."
He doubted if the record highs would lead to a new breed of nervous investors worried about an imminent market downturn.
Instead, he thought the next direction would come from overseas when the market goes ex-dividend.
"The dividend yields are too good to ignore," he said. "Most investors are holding pretty well."
Australian Shareholders Association chief executive Stuart Wilson declined to comment on whether there was too much heat in the market at the moment. But he said there was plenty of life for astute investors.
"No matter where the level of the market is, if you look hard enough there are always some bargains," Mr Wilson said.
