Local stocks rose 0.6 per cent today as investors piled into banks to take advantage of their dividend yields, and amid optimism that the country's biggest lenders would report rising profits this week and next.
The benchmark S&P/ASX 200 index gained 28.3 points to 5125.8, building on last week's 3.4 per cent rally to narrow in on a multiyear high of 5163.5 touched last month. Australia was one of the few regional markets open, with exchanges in Japan and China shut for national holidays. The local gains came despite a weak lead from Wall Street on Friday and declines in metal and oil prices.
"There's a bit of positioning occurring before three of the big four banks report this week and next," said Chris Macdonald, investment adviser at RBS Morgans in Sydney.
Australia's near-record-low interest rates have made cash investments less attractive, and in turn increased the appeal of banking stocks with comparatively high dividend yields.
"Investors are happy to continue buying yield even though there's been a bit of yield compression as a consequence," Mr Macdonald said.
ANZ, which reports first-half earnings tomorrow, climbed 0.7 per cent as analysts forecast a cash profit of $3.12 billion, about 5 per cent higher than in the six months ended March 2012.
The result will likely be helped by a lower bad debt charge, said Chris Weston, chief market strategist at broker IG in Melbourne. Mr Weston expects the bank to pay a first-half dividend of about 68c per share.
Westpac, which releases its first-half result this Friday, jumped 1.7 per cent, while National Australia Bank, which does so next week, gained 1.4 per cent.
Commonwealth Bank's financial year ends June 30 and it will report first-quarter results in mid-May. Its shares added 1.1 per cent.
Mining companies BHP Billiton and Rio Tinto both fell, 0.1 per cent, and 0.8 per cent, respectively, after West Texas Intermediate crude declined 0.7 per cent on Friday to $US93. Copper and aluminium lost 2.1 per cent, and 3.3 per cent, respectively.
In New York, the Dow Jones Industrial Average closed slightly higher on Friday, but the S&P 500 index slipped 0.2 per cent as quarterly US gross domestic product, or GDP, growth missed expectations.
A silver lining to the disappointing GDP figure was that it may encourage the Federal Reserve to keep on stimulating the U.S. economy with so-called quantitative easing. A higher-than-expected reading might well have prompted an early rollback of its bond-buying program.
Aside from bank profits, key events this week include a rate decision by the European Central Bank, monthly US non-farm payroll data, and Chinese inflation figures.
Australian healthcare stocks, which some investors also view as defensive, were aided by a strong quarterly result from Resmed on Friday. Resmed, which helps treats sleep disorders and is also listed in the US, was up 3.6 per cent. Rival Primary Healthcare rose 2.5 per cent, while CSL added 1.3 per cent.
