The Australian sharemarket more than reversed yesterday’s loss as bargain hunters dived back into high yielding stocks following another bullish offshore session.
Banks led the S&P/ASX 200 index 88 points, or 1.75 per cent, up to 5120.2 points with global sentiment buoyed by a drop in US weekly jobless claims data that drove the benchmark S&P 500 index to a record closing high.
After the US close the US Federal Reserve announced that 14 of 18 major US banks would be allowed to distribute capital to shareholders, raising expectations that financials would lead US markets higher in coming weeks.
Miners struggled for most of the first half of the session after spot iron ore slumped another 4.4 per cent to $US132.90 a tonne of Thursday, but buying returned after Shanghai steel rebar futures jumped 3.5 per cent today. Copper was up 0.3 per cent at $US7825 a tonne.
Domestic sentiment was also helped by a drop in bond yields after broader understanding of the possible statistical distortion of the surprise surge in Australian new jobs released yesterday prompted markets to price in a more flatter yield outlook for the year.
Australian government 10-year yields dropped 6.3 points to 3.621 points and the Australian dollar was little changed at $US1.0370 as the yield outlook turned neutral.
Explaining the lacklustre performance of Asian markets and currencies in recent weeks, ANZ currency strategist Khoon Goh wrote in a report that Asian portfolio funds, excluding Japan, experienced the first net-outflow since September as investors withdrew $100 million, with China the biggest loser.
“Rotation from emerging markets to developed markets equities seems to have started,” he said. “Developed market equity funds attracted its largest weekly inflows in our records, while emerging market equity funds reported outflows for the week.
The Shanghai composite index fell 0.8 per cent in early trade before ramping to trade 1.6 per cent up at the close of the ASX with little news flow to explain the reversal.
In Tokyo the Nikkei index climbed another 1.3 per cent after the Bank of Japan’s incoming governor and two deputies were approved by lawmakers, paving the way for a fresh wave of monetary stimulus promised by the government.
The broader All Ordinaries index was 85.5 points, or 1.7 per cent, up at 5129.3.
On the ASX 24, the March share price index futures contract was 92 points higher at 5122, with 49,138 contracts traded.
CMC Markets senior trader Tim Waterer said investors had over-reacted in pushing prices down yesterday, when the best jobs data in more than a decade was interpreted as bad news by denting the chance of more interest rate cuts.
“I think the selling yesterday was overdone so a lot of the buying we’re seeing is making up some of the losses yesterday,” he told AAP.
“It was a counter-intuitive move downwards.”
Friday’s rise on the ASX was fuelled by a strong performance by banks and retail stocks. National Australia Bank added 38 cents, two per cent, to $31.30, ANZ advanced 54 cents to $28.72, Commonwealth Bank put on $1.30 to $70.18 and Westpac was the stand-out, rising 76 cents, or 2.52 per cent, to $30.89.
Among retailers, Wesfarmers climbed $1.04, or 2.5 per cent, to $43.12, and Woolworths lifted 93 cents, or 2.65 per cent, to $36.05 and JB Hi-Fi improved by 1.55 per cent, to $15.08.
Global miner BHP Billiton closed up 46 cents at $35.55, Rio Tinto lifted 60 cents to $61.30 while Fortescue Metals was nine cents up at $4.06.National turnover was 2.57 billion securities worth $6.19 billion.
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