Shares in Commonwealth Bank soared above $70 to a new record yesterday as the local stocks hit a 4 1/2-year high after encouraging US non-farm payrolls data suggested the world's biggest economy was recovering.
Strength in defensive and high-yield stocks offset weakness in materials stocks following disappointing Chinese economic data released over the weekend.
The S&P/ASX 200 closed up 0.5 per cent at 5146.9 after rising to 5148.4, its highest point since September 2008. The index is up 11 per cent this year, extending a 15 per cent rise last year.
However, the value of shares traded shrank to $3.9 billion compared with $4.9bn on Friday, largely because of holidays in Victoria, South Australia and the ACT.
CommSec market analyst Juliette Saly said local shares finished strongly after a slow start as Japanese shares pushed higher yesterday afternoon.
"We've had a good start to the trading week, riding on the coat-tails of what we saw coming through from offshore markets on Friday," Ms Saly said.
"We had pretty good movement coming through in Asia, which helped kick things along."
Tokyo shares added 0.92 per cent yesterday morning thanks to a weakening yen following another record finish for the Dow on Wall Street.
Underscoring the strength in the market, Commonwealth Bank and Woolworths hit record highs, while Wesfarmers and National Australia Bank hit their highest point in more than five years.
Commonwealth Bank gained 30c to close at $70.13, the first time the stock has closed above $70.
NAB climbed 54c to $31.64, while ANZ lifted 8c to $29.20 and Westpac was flat at $31.25.
News Corporation, Coca-Cola Amatil, Amcor and Goodman rose more than 2 per cent.
Woolworths climbed 34c to $35.71.
Building products maker CSR ended up 2.9 per cent after reversing a 4.3 per cent fall caused by a profit warning accompanying the announcement of a restructuring of its Viridian glass business.
Construction and mining firm Leighton Holdings gained 44c to $22.48 as its subsidiary, Thiess, won a $212 million contract for work on Chevron's $52bn Gorgon project in Western Australia.
"We are seeing continued rotation as people move money away from resources into other sectors," said White Funds managing director Angus Gluskie.
"China's disappointing economic data has put a question mark over the materials sector, but improving US employment data, combined with expectations of ongoing US quantitative easing, is underpinning other sectors."
In the resources sector, heavyweights BHP Billiton, Rio Tinto and Fortescue Metals Group fell between 0.8 per cent and 2 per cent.
"Australian shares really need to see some profit growth start to come through because the benchmark S&P/ASX 200 is trading around the average long-term P/E ratio of 14 times," said Belinda Allen, who helps manage about $150bn as senior investment analyst at Colonial First State Global Asset Management.
