The Australian share market has made solid gains after a strong lineup of company earnings results briefly drove stocks above 6,000 points on Friday before closing just shy of the mark and up 1.6 per cent for the week.
The benchmark S&P/ASX200 index closed up 48.9 points, or 0.82 per cent, at 5,999.8 points, with a share price dip on Woolworths - despite a bumper first-half result - more than offset by a steady flow of positive local earnings.
Citi director of equities sales Karen Jorritsma said with the market again challenging 6000 points, the consensus is that the recent local volatility was a correction and not a collapse.
"Over a third of earnings results have been better than expected, which tells you conditions are good," Ms Jorritsma said.
Gains were led by the major banks and health stocks, plus a rebound in energy and mining shares.
The Commonwealth Bank closed the highest of the big four, 1.1 per cent stronger at $75.46 after saying it rejecting 89 of the 100 expanded claims brought against it by the anti-money laundering regulator.
ANZ, National Australia Bank and Westpac all finished 0.9 per cent higher.
With global oil prices at two-week highs, Woodside Petroleum, Oil Search and Origin Energy lifted 0.5 per cent, 0.7 per cent and 0.8 per cent respectively.
The materials sector lifted 1.5 per cent, BHP Billiton climbing 1.6 per cent and Rio Tinto up 0.9 per cent, both shaded by the BHP spinoff South 32 which jumped 6.7 per cent.
Woolworths reported a first-half 38 per cent jump in net profit off the back of booming supermarket sales that outstripped rival Coles.
Ms Jorritsma said however, that Woolworths disappointed investors relative to expectations and was followed by a subsequent migration into Wesfarmers.
"Wesfarmers is regarded as better value," Ms Jorritsma said.
Woolworths ended 2.6 per cent lower at $26.92 and Wesfarmers climbed 1.6 per cent to $42.53
Generic drugs supplier Mayne Pharma jumped 10.7 per cent to 77.5 cents despite slipping to a net half-year loss of $174.2 million, with the company indicating a stronger second half was on the way with improved trading momentum.
Accent Group shares climbed 18.5 per cent to $1.055 - their highest level in a year - after the owner of The Athlete's Foot and Platypus footwear chains lifted first-half profit almost 20 per cent thanks to a 16.5 per cent jump in sales.
Southern Cross shares fell 9.7 per cent to $1.07 after the media company's half-year net profit dropped 21.2 per cent in a result weighed on by the divestment of its northern NSW TV business - a move that ate into revenue.
The Australian dollar is steady against a softening US dollar, weakened by dovish interest rate commentary from a US Federal Reserve official.
At 1700 AEDT, the local currency was trading at 78.24 US cents, from 78.08 on Thursday.
ON THE ASX:
* The benchmark S&P/ASX200 index closed up 48.9 points, or 0.82 per cent, at 5,999.8
* The broader All Ordinaries index ended up 47.5 points, or 0.78 per cent, at 6,105.2 points
* The SPI200 futures contract was up 59 points, or one per cent, at 5,973.0 points.
* National turnover was 3.1 billion securities traded worth $8.1 billion
CURRENCY SNAPSHOT AT 1700 AEDT:
One Australian dollar buys:
* 78.24 US cents, from 78.08 on Thursday
* 83.6995 Japanese yen, from 83.90 yen
* 63.60 euro cents, from 63.61 euro cents
* 56.12 British pence, from 56.15 pence
* 107.22 NZ cents, from 106.70 cents
GOLD:
The spot price of gold in Sydney at 1700 AEDT was $US1,327.50 per fine ounce, from $US1,323.44 per fine ounce on Thursday.
BOND SNAPSHOT AT 1630 AEDT:
* CGS 4.50 per cent April 2020, 1.9727pct, from 2.001pct
* CGS 4.75pct April 2027, 2.7825pct, from 2.816pct
Sydney Futures Exchange prices:
* March 2018 10-year bond futures contract at 97.165 (implying a yield of 2.835pct), from 97.135 (2.865pct) on Thursday
* March 2018 3-year bond futures contract at 97.90 (2.115pct), from 97.870 (2.130pct).
(*Bond market closes taken at 1630 AEDT previous local session; currency closes taken from 1700 AEDT previous local session)
Australia's share market it set for a positive start thanks to a good session in the United States.
The futures market is pointing to a 31 point rise for the ASX200 at the start of trade.
"It was a very good session in the United States," CommSec chief economist Craig James told AAP.
"All the major gauges in the United States put on gains in fact the Dow Jones was up by almost 348 points at 1.4 per cent."
Higher oil and iron ore prices and few negatives on other commodities is also favourable to the market come Thursday.
Investors have also been comforted by speeches in the US by Federal Reserve regional presidents, after significant declines in the market a few weeks back.
"(They) basically assured investors that interest rates are going to go up, but they're going to go up at a measured pace," Mr James said.
"Probably there'll be three interest rate hikes this year and that's what the market's expected and that's what they wanted to hear, that's what they heard."
With the end of earnings season approaching, reports from the "stragglers" will come through Monday to Wednesday, but overall the earning session has been good, Mr James said.
"A number of the resource companies did well because of stronger commodity prices and a number of the media companies ... television companies like Seven West and Nine Entertainment have done a bit better as well because advertisers are moving back to television and away from social media which is an interesting development," he said.
QBE Insurance and Caltex Australia will release full year results this week, while BlueScope, Virgin Australia and Harvey Norman will release half year results.
The Australian Bureau of Statistics on Thursday will release private capital expenditure for the December quarter and expected expenditure.
U.S. stocks rallied on Friday, lifted by gains in technology stocks and a retreat in Treasury yields as the Federal Reserve eased concerns about the path of interest rate hikes this year.
The U.S. central bank, looking past the recent stock market sell-off and inflation concerns, said it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.
Investors largely expect the Fed to raise rates three times this year, beginning with its next meeting in March, the first under new Chair Jerome Powell. Traders currently see a 95.5 percent chance of a quarter-percentage-point hike next month, according to Thomson Reuters data.
“Certainly bond yields pulling back today is helpful for stocks, at least for the short term, that has been the narrative that is out there - that higher bond yields are weighing on stocks and this preoccupation with three percent,” said Willie Delwiche, investment strategist at Baird in Milwaukee.
“So moving away from that, for today at least, provides a bid for equities.”
Powell’s first public outing will be on Tuesday, when he will testify separately before the House and Senate committees.
The Dow Jones Industrial Average .DJI rose 347.51 points, or 1.39 percent, to 25,309.99, the S&P 500 .SPX gained 43.34 points, or 1.60 percent, to 2,747.30 and the Nasdaq Composite .IXIC added 127.30 points, or 1.77 percent, to 7,337.39.
Benchmark 10-year U.S. Treasury notes US10YT=RR last rose 13/32 in price to yield 2.8714 percent, from 2.917 percent late on Thursday.
The dip in yields helped boost bond proxy sectors such as utilities .SPLRCU, up 2.66 percent, and real estate .SPLRCR, up 1.72 percent. The sectors have been among the worst performers so far this year on expectations of climbing rates.
Tech shares .SPLRCT climbed 2.17 percent led by gains in Hewlett Packard Enterprise (HPE.N), which rose 10.5 percent and HP Inc (HPQ.N), up 3.5 percent.
The two companies created from the split of Hewlett Packard Co in 2015, reported strong results and HPE also announced a plan to return $7 billion to shareholders.
For the week, the Dow rose 0.37 percent, the S&P advanced 0.56 percent and the Nasdaq gained 1.35 percent.
Blue Buffalo Pet Products (BUFF.O) jumped 17.23 percent after General Mills (GIS.N) said it would buy the natural pet food maker for $8 billion. General Mills was the biggest percentage decline on S&P 500, falling 3.59 percent.
Advancing issues outnumbered declining ones on the NYSE by a 4.54-to-1 ratio; on Nasdaq, a 2.82-to-1 ratio favored advancers.
The S&P 500 posted 10 new 52-week highs and one new low; the Nasdaq Composite recorded 64 new highs and 57 new lows.
Volume on U.S. exchanges was 6.05 billion shares, well below the 8.38 billion average over the last 20 trading days.
Source: Netwealth Morning Business Roundup
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