Australian shares have closed at a new six-year high, notching up a seven day winning streak as the big four banks lifted the index and investors reacted to a mixed bag of June quarter company updates.
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The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both added 0.2 per cent on Thursday, to 5585.2 points and 5576.8 points respectively, as local shares took muddled cues from offshore. Major equity markets in the United States, Europe and Asia were mixed.
If the market gains on Friday it will mark the longest consecutive run of gains in almost one year.
UBS has trimmed its year-end target for the ASX 200 from 5700 points to 5625 points based on subdued expectations ahead of the August reporting season when most companies deliver final full-year results for the 2014 fiscal year.
“Expectations for aggregate earnings per share growth in FY14 now stands at 13 per cent, year-on-year, compared to 14 per cent about six months ago,” UBS Australian equity strategist David Cassidy said.
More importantly, earnings growth expectations for the current financial year are even more modest, he said.
“Aggregate earnings per share growth for FY15 are now at 5.2 per cent, compared to expectations of 8.5 per cent six months ago, with the downgrade driven primarily by mining sector earnings (mostly iron ore price slippage) and to a lesser extent downgrades in the industrials ex financials sector,” Mr Cassidy said.
Investment bank Macquarie Group dropped 2.9 per cent to $59.51 after delivering a softer-than-expected first quarter profit result as weak trading volumes hurt its Securities division.
Among the biggest retail banks, Commonwealth Bank of Australia added 0.6 per cent to $82.01, Westpac Banking Corporation gained 0.1 per cent to $34.13, and National Australia Bank rose 0.2 per cent to $34.49. ANZ Banking Group, the only one of the big four not to cut its five-year fixed lending rate this week, lifted 0.2 per cent to $33.58.
Insurance Australia Group, owner of NRMA, jumped 2.2 per cent to $6.17 after upgrading its full-year profit margin expectations to their highest level since listing, citing benign weather.
Telstra Corporation rose 0.6 per cent to $5.48 following a decision to send more than 600 jobs offshore. In the retail sector Woolworths added 0.8 per cent to $36.22, while Wesfarmers, owner of Coles, gained 0.2 per cent to $43.73.
Mining stocks were mostly lower despite a closely watched survey indicating Chinese factory activity is at an 18-month high. The HSBC manufacturing purchasing managers index for July beat forecasts for a rise to 51 points, lifting to 52 points.
Resources giant BHP Billiton rose 0.2 per cent to $39.06, as a raft of analysts reiterated “buy” ratings after the company delivered a bumper June quarter production report and upgraded its 2015 production guidance on Wednesday.
Iron ore is now trading below $US95 for the first time in three weeks. When the ASX closed, Dalian iron ore futures trading in China was tipping another fall overnight.
Junior iron ore miner Atlas Iron gained 3.5 per cent to 59¢ after showing record June quarter production.
Australia’s biggest gold producer, Newcrest Mining, dropped 6.2 per cent to $10.78, after flagging a likely impairment charge of up to $2.5 billion after tax. June quarter production rose 15 per cent from the April quarter.
Rare earths miner Lynas Corp was the worst-performing stock in the ASX 200, dropping 7.5 per cent to 18.5¢, as eight consecutive session without a fall came to an end.
Uranium miner Paladin Energy was the best-performing stock in the ASX 200, adding 4.1 per cent to 38¢, as it announced the successful re-financing of the $US70 million ($74.1 million) debt facility for its Langer Heinrich project.
