Confidence lifts ASX above 5000pts
The Australian sharemarket has climbed over the psychological 5000 point mark for the first time in almost two years.
As a keenly watched business survey showed a gradual lift in trading conditions and confidence across the country through January, the All Ordinaries index reached 5000.1 just after 7.30am WA time.
It was the first time the bourse had sat above the 5000 mark since April 27 in 2011. The last time it finished above 5000 was on April 11, 2011.
The look above 5000 was short-lived, however.
It slipped back to the 4990 mark within an hour after its dalliance above 5000.
The All Ordinaries has now climbed by more than 20 per cent since October 2011 when it stood below 3950.
CommSec chief equities economist Craig James said there would be a psychological impact from the All Ordinaries gain.
"The fact that the market is rising and pushing above old barriers does engender confidence," he told _The West Australian _.
"And the publicity generated by breaking through 5000 will get more people thinking about the value of leaving money in bank deposits earning smaller returns."
The improvement on the All Ordinaries came as NAB's survey of business conditions in January showed a small improvement on most measures.
Business confidence, business conditions, trading conditions and profitability all improved on their low December reads.
"Business confidence was broadly steady in January, after recovering strongly in December from very poor levels," NAB chief economist Alan Oster said.
"That recovery mainly reflects external factors, including the rally in global equity markets and generally better activity in China, as well as recent RBA cuts. However confidence remains below long-run average levels."
However, capacity utilisation fell marginally through the month to be at its lowest level since 2001 while forward orders also fell.
Business conditions in WA improved strongly last month which fed into a pick-up in confidence.
However conditions and confidence in both Queensland and NSW, which were hit by heat waves and floods in January, fell.
Mr Oster said the NAB still expects the Reserve Bank to cut official interest rates another 0.75 percentage points this year although it has pushed back when the bank will move.
"The Reserve Bank appears now focused on non-mining recovery and business investment. With the labour market still holding up and the RBA still looking for the impact of past cuts, we have delayed the next cut to May," he said.
