The Australian sharemarket rose to a fresh four-and-a-half year high today as positive domestic earnings reports and further signs of improvement in the global economy encouraged investors to continue moving money from cash and bonds to equities.
Amcor, Pacific Brands, BlueScope Steel and Bendigo Bank rose 3.2 per cent to 11 per cent after their earnings reports, while BHP Billiton, Woodside Petroleum, QBE Insurance and AMP Limited rose 0.3 per cent to 1.8 per cent ahead of their results later this week.
Over the weekend, the US Federal Reserve said New York State Manufacturing rose for the first time since July, and the region's business conditions bucked economists' forecasts for a decline. US consumer confidence topped economists expectations for February.
At 11.35am AEDT, the benchmark S&P/ASX 200 was up 0.5 per cent at 5058.4, the highest point for the index since the global financial crisis intensified with the collapse of Lehman Brothers in September 2008.
Strength in banks, industrials, consumer discretionary, consumer staples and healthcare stocks easily absorbed ex-dividend falls in Commonwealth Bank and Telstra. CBA fell 1.4 per cent or 95c after going ex-dividend $1.64, and Telstra shed 2.3 per cent or 10c, after trading ex-dividend 14c.
Traders said market sentiment improved after the index broke through psychological resistance at 5000 last week.
"Australian share market sentiment has been quite negative for the past two years that it's now seeing a significant mood shift in response to an improving economic landscape, particularly in China,'' said RBS Morgans investment adviser Christopher Macdonald.
"We are seeing some excellent results coming out of this reporting season, and even average results are being rewarded as money is flowing out of cash and bonds in search of capital growth and higher yields.''
Australian 10-year Commonwealth Government bond yields rose three basis points to 3.56 per cent on Monday, fuelling continued demand for equities.
"Worldwide central banks are forcing people into risk assets by continuing to pump money and by keeping interest rates low,'' Mr Macdonald said.
"As we get a reweighting from bonds to equities, the sheer size of the bond market is putting a lot of upward pressure on equities.''
Traders were looking to gauge the mood of global markets this week as China returned from week-long Lunar New Year holidays, and as investors faced uncertainty from an election in Italy this coming weekend.
Reflecting such nervousness, Newcrest Mining fell 5.7 per cent as spot gold dived on Friday after regulatory filings showed that several high-profile fund managers cut back their bullion holdings. Similarly, Nymex crude oil prices fell 1.5 per cent to $US95.86 on Friday and London Metals Exchange copper declined 0.4 per cent.
"I think Australian equities can run a little bit further before we set up those classic conditions where there will be a collective sense that the market has gone too far too fast and needs to pull back,'' Mr Macdonald said.
"That said, the longer we can stay above 5000 and avoid any global hiccup, then it does start to look like a genuine floor.''
