The Australian stockmarket was an unusual beacon of bullishness yesterday, judging by the way other markets went.
Further surges in the prices of bank stocks – with an all time high for the ANZ – saw our market close at a new five year high – the third in as many days.
The futures market have our market opening with a small gain this morning, and with production reports from the likes of BHP Billiton, and a number of annual meetings, there’s every chance of a another day of solid trading.
Most major bourses ended with gains overnight – Germany was up to a new all time high, also its third in as many days, other European markets traded sideways and Wall Street had a droopy day.
In the US, the Dow was down while the Nasdaq and the Standard & Poor’s 500 both ended with small gains as investors eyed the release of the delayed September jobs data tonight, our time, that could see the Fed delay cutting its stimulatory spending until 2014.
The Aussie dollar maintained its gains and traded around 96.50 overnight.
Gold prices drifted as well and US oil prices fell under $US100 a barrel and the lowest since July 1.
The US oil and gas boom continues to expand, flooding markets with more product and for the moment putting something of a lid on prices. US oil prices are down around 8% in a month.
That’s helping drag down oil prices around the world and the Singapore oil and petrol prices are trading at a discount to Australian domestic retail petrol prices.
But as confident as the local sharemarket and investors are, a note of caution should be observed.
Much of the sharp rise in 2013 so far has come from bank shares and you have to wonder just how far further their incredible rally can go.
This strength will be tested next week with the ANZ and the NAB set to reveal 2012-13 profits and Westpac the week after. The Commonwealth will also update the market on its first quarter trading.
The Big Four YTD – NAB leads the great 2013 bank surge
Some of the buying would have been by big investors trying to exploit the high dividend and franking levels of the banks-even though rules have changed on so-called dividend washing.
Since the market dropped to a low of 3145.5 in early 2009 and the ASX200 has risen 70.5%.
That sounds impressive, but the US market is up more than 130%.
This year the Aussie market is up 15% and more than 30% in the past 18 and a half months.
And you only have to look at the way the big four banks dominate the ASX 200 to understand our strong performance of late.
The big four account for 30% of that index, and their big gains have become the market’s solid gains.
The ANZ was the latest bank to enjoy a record run, rising 0.8% to $32.12. It hit an intra-day high of $32.28 and the shares are up 28.2% so far this year.
Westpac shares are up 31.3% this year and closed at $34.08 yesterday, to take them to within sight of the all-time high of $34.68 hit in May.
The Commonwealth ended just 45 cents under of its record high of $75.00, hit in August, and is up 20% so far this year (a relative underperformer).
And NAB share rose to five-year highs to $34.97, up a very tasty 44% this year.
Shares in the Bank of Queensland and Macquarie are both also at multi-year highs, with rises of 62.6% and 43.7% respectively.
(Remember the Bank of Queensland is coming off that big loss in the 2011-12 financial year which dragged down the shares for a long period of time).
The question now is whether the banks have finished their current runs, or whether the results and updates in the next month will provide enough new information to justify new gains.
