The sharemarket rose to a multi-year high yesterday amid growing optimism about corporate earnings and continued weakness in the domestic bond market.
Minutes from the Reserve Bank's February board meeting left the door open to more interest rate cuts if the economy weakened, but the RBA signalled that it was satisfied rate cuts were helping to boost the economy.
The benchmark S&P/ASX 200 closed 0.4 per cent higher at 5081.9, its highest point since September 2008. The index has gained 28 per cent since June amid fading macroeconomic risks, improving economic data in China and the US, and a surprisingly positive start to the domestic earnings period.
BHP Billiton, Woodside Petroleum, Suncorp, AMP, Brambles, Origin Energy, Santos and Seven Group rose between 0.5 per cent and 1.9 per cent before their results announcements this week, while Commonwealth Bank climbed 0.4 per cent and Telstra firmed 1.3 per cent after going ex-dividend on Monday.
CSL jumped 1.8 per cent.
"I think it's a pretty clear picture that there is a lot of money looking to get into this market and the big dividend stocks are still seeing buying," Goldman Sachs institutional trader Richard Coppleson said.
Among companies that reported yesterday, Mount Gibson, Sonic Healthcare and Monadelphous fell between 3.9 per cent and 8.5 per cent after disappointing the market.
Balancing the disappointments were results from Coca-Cola Amatil, Asciano, Southern Cross Media and InvoCare. Shares in those companies rose between 1.9 per cent and 10 per cent.
Adding credence to the rally in local shares, the value of stocks traded stayed relatively high at $6.4 billion, against the December-quarter average of $4bn. The S&P/ASX 200 was up 9.3 per cent year to date, versus 5.2 per cent for the MSCI World index.
A weakening bond market added strength to equities after the RBA minutes signalled there was less need for domestic interest rate cuts, since "monetary policy was already accommodative".
It also said global economic conditions were a little more positive.
"As long as the RBA keeps referring to an improving global outlook, it will fuel the local equity market's fire, but also should see Australian bond yields move higher on falling rate cut bets, or even the chance that the RBA will need to start lifting the cash rate later this year or early in 2014," BBY institutional trader Anson Rosewall said.
The market was also awaiting US Federal Reserve board minutes due tomorrow.
Mr Rosewall said US bond yields could jump, sparking a further shift into equities, if there were growing divisions in the Fed on continuing bond purchases throughout this year.
Analysts said the local sharemarket was proving resilient to uncertainty about Italian elections this weekend.
"Our market is largely ignoring Europe for now because people are looking at the overall region," IG market strategist Stan Shamu said.
"Italian politics won't make much difference to sentiment as long as overall European economic data point to stabilisation."
The Australian dollar was higher in late Asian trading after the RBA signalled that while a further interest rate cut was possible, it was in no mood to deliver it just yet.
At 5pm AEDT, the dollar was buying $US1.0329, up US0.34c.
The RBA has cut interest rates by 1.75 percentage points since November 2011, a reduction it describes as "substantial".
It said it was seeing early signs that prior cuts were starting to flow through to the economy.
