Bank shares push ASX to 11.5-year high

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The Australian sharemarket has roared higher, posting its best day in 15 weeks following the coalition’s surprise federal election victory.

The benchmark S&P/ASX200 index was up 110.8 points, or 1.74 per cent, to 6,476.1 points at 1615 AEST on Monday, while the broader All Ordinaries was up 104.5 points, or 1.62 per cent, to 6,564.7.

It was the fourth straight day of gains for the ASX200, and the best day since February 5, hitting a level it hadn’t seen since November 2007.

“A very big day, a very strong day, a lot of money flowed through the markets,” said CommSec market analyst Steven Daghlian.

Banking stocks in particular were resurgent, collectively soaring 5.85 per cent, with the four heavyweights posting gains of between six and nine per cent.

Together those four stocks accounted for more than 80 per cent of the ASX200’s gains.

“It’s not often we see blue chip stocks gaining nine per cent in a single day,” CMC Markets chief market strategist Michael McCarthy said.

And yet Westpac was up 9.2 per cent to $27.75, while NAB gained 7.9 per cent to $25.81, ANZ was up 7.8 per cent to $27.86 and Commonwealth Bank gained 6.3 per cent to $77.40.

Medical insurers also enjoyed some of the day’s strongest gains, with NIB soaring 15.79 per cent to $6.82 and Medibank up 11.5 per cent to $3.21 as it became clear Labor’s plan to limit premium increases to two per cent a year wouldn’t be taking effect.

“It’s clear the opposition’s proposed cap on medical insurance premiums were weighing on them,” Mr McCarthy said.

Private healthcare operator Ramsay Healthcare, which could also have been hit by the limits on premium increases, gained 7.3 per cent to $69.58.

Retail stocks also surged, with homewares company Adairs up 5.74 per cent to $1.75, Woolworths up 1.87 per cent to $34.82 and JB Hi-Fi up 5.24 per cent to $26.92.

Automotive dealership company AP Eagers gained 5.6 per cent to $8.90 while possible merger partner Automotive Holdings Group surged 9.0 per cent to $2.55.

Yancoal, which could have been hurt by Labor’s stricter environmental policies, gained 5.2 per cent to $3.47, while Whitehaven Coal was up 1.42 per cent to $4.30.

Companies that do not typically pay franked dividends – such as airports and real estate trusts – were lower.

Mr McCarthy said investors had likely moved into such companies in the expectation that Labor would scrap franking credits, and were now moving out of them.

Property trust Dexus was down 0.7 per cent to $12.95, Goodman Group was down one per cent to $13.58 and Sydney Airport was down 3.96 per cent to $7.51.

With negative gearing apparently here to stay, companies exposed to the property market also gained.

Developer Stockland Group surged 4.8 per cent to $4.12, building material company Boral gained 4.7 per cent to $4.91 and Realestate.com.au operator REA Group was up 4.1 per cent to $91.35.

But childcare provider G8 Education was down 2.7 per cent to $2.88 as investors realised Labor wouldn’t be in power to fulfil its promise to increase childcare subsidies.

Tech stocks were also down, collectively 1.43 per cent, as investors switched out of the sector.

Not everything was about the election. Fortescue Metals gained three per cent to $9.22 after the price of iron ore rose 2.4 per cent to break the $US100 a tonne level for the first time in five years.

The Aussie dollar had a more muted reaction, buying 69.26 US cents, up from 68.89 US cents on Friday.

Mr Daghlian said currency traders would be watching the Reserve Bank’s release of minutes on Tuesday, as well as a speech by RBA Governor Philip Lowe set for 1310 AEST, for hints on whether an expected interest rate cut was likely soon.

ON THE ASX:

* The benchmark S&P/ASX200 index was up 110.8 points, or 1.74 per cent, to 6.476.1 points at 1630 AEST on Monday.

* The All Ordinaries was up 104.5 points, or 1.62 per cent, to 6,564.7.

* At 1630 AEST, the SPI200 futures index was flat at 6485.

CURRENCY SNAPSHOT AT 1630 AEST:

One Australian dollar buys:

* 69.26 US cents, from 68.89 US cents on Friday

* 76.29 Japanese yen, from 75.51 yen

* 62.09 euro cents, from 61.60 euro cents

* 54.41 British pence, from 53.87 pence

* 105.90 NZ cents, from 105.27 cents

Source