ASX200 closes above 6,000-point barrier for second day running as it sustains post-GFC highs
The Australian stock market has closed above 6,000 points for the second day running although analysts warned that it was too early to predict whether it could push on and match the kind of all-time highs being marked in New York, London and Tokyo this week.
The S&P/ASX200 reached its highest level since before the global financial crisis on Tuesday and remained above the benchmark level at the close on Wednesday at 6,016 points – a slight rise on the overnight close of 6,014.
A strong showing from the banks helped the market offset a negative impact on mining stocks from a dip in commodity prices.
Commonwealth Bank, for example, gained 2.65% after it reported a rise in its quarterly profit to $2.65bn.
Investors in Australia have been buoyed by strong leads from the US and other major markets. The MSCI all-country index burst through the 500-point mark for the first time on Tuesday. It also follows a series of record highs on Wall Street, and Monday’s rally in London which pushed the FTSE 100 to a record close. On Tuesday, Japan’s Nikkei also popped higher to its highest closing point in 25 years.
In the US, strong profits from companies such as Apple, Amazon, Caterpillar, Mastercard, BP and Goldman Sachs have overcome concerns about the trump presidency and geopolitical issues such as tension with North Korea.
The chief market analyst for CMC Markets, Ric Spooner, said the key drivers in Australia this week had been rising oil and iron ore prices last night, but it might not all plain sailing for the ASX.
As traders were reminded on several occasions over recent months, it is common for markets to test the limits of a trading range, often breaking narrowly through it. This happened on several occasions as the ASX 200 made minor breaks below the bottom of the trading range over recent months, only to rebound strongly,” he said on Wednesday.
“While the ASX 200 broke only narrowly into new high ground yesterday, it did so with good trading volume, finishing close to its high for the day. These are often indications of ongoing momentum that could yet re-emerge over coming days to push the index convincingly clear of resistance, indicating renewed confidence. Time will tell.”
The Reserve Bank of Australia’s decision to again leave the cash rate unchanged on Tuesday had little impact on the Australian dollar although it was lower against its US counterpart on Wednesday.