Banks spur ASX to stronger close

The local market has ended firmly higher, as optimism over Trump’s plans fired up bank stocks.

Gains in major bank stocks today saw the local market finish its shortened week on a strong note, while gold miners took a battering as confidence flooded the US market amid a record-breaking week for Wall Street.

The benchmark S&P/ASX 200 ended Friday’s session 0.8 per cent higher than Wednesday’s close, at 5714 points, after taking a break on Thursday for Australia Day celebrations. For the four-day week, the index recorded a 1.1 per cent rise.

Donald Trump’s first week as US President has been seen as a success from an investor perspective, according to IG chief strategist Chris Weston, with his entry in to the Oval Office taken as a cue to buy.

“The market likes what they have heard from Trump and his administration, though, perhaps not from a wider humanitarian perspective,” Mr Weston said. “But certainly on Tuesday and Wednesday where the rhetoric and actions highlighted a sheer urgency, purpose and drive to push the US economy forward, this has traders putting risk back on the table.”

Wall Street’s Dow Jones touched a record high above 20,000 points on Wednesday night (AEDT), which helped warm local investors to financial stocks.

The financial sector ended Friday 1.3 per cent higher, while the material sector was the only one to end the session in the red.

Commonwealth Bank shares added 0.9 per cent to end the session at $82.98, while NAB gained 1.4 per cent to $30.68, ANZ rose 1 per cent to $29.77 and Westpac outperformed peers with a 1.8 per cent rally to $32.35.

Elsewhere, Woolworths rallied 2.1 per cent to $25.16 following a rating upgrade from JP Morgan, while Wesfarmers gained 1 per cent to $41.12.

Telstra increased 0.8 per cent to $5.11, CSL rose 0.5 per cent to $112.88 and Macquarie added 1.9 per cent to $85.77.

BHP was among the few major stocks to finish the session in negative territory, with a 1.3 per cent fall taking it to $27.52, while Rio Tinto gained 0.9 per cent to $67.85 and Fortescue Metals rose 0.6 per cent to $6.63.

Gold stocks were firmly on the outer, with the price of the precious metal dropping 3 per cent since Tuesday following US dollar strength and Wall Street’s record high.

Local producers were sent into a tailspin, with Evolution Mining the worst performing stock of the session, down 6.6 per cent to $2.12. Northern Star, Saracen Metals, Newcrest Mining, Regis Resources and Saint Barbara fell between 2 per cent and 5 per cent.

Salmon producer Tassal was today’s best performer with a 5.3 per cent gain on more than double the stock’s average volume for the last 30 days. Meanwhile, Asaleo Care, BlueScope Steel, Spark New Zealand, Aconex and Treasury Wine Estates all found gains over 3.5 per cent.

A solid line-up of central bank and economic data await investors in the coming week, with the Bank of Japan and Federal Reserve both expected to keep rates on hold when they meet on Tuesday and Wednesday, respectively, while US jobs data will be of interest. Locally, NAB’s business conditions data will be watched on Tuesday for any sign of improvement.

Australian investors will also be eyeing the start of the December half reporting season, set to get underway next week with Navitas, Downer EDI, Tabcorp and James Hardie among those reporting.

“After two years of falling profits this financial year is expected to see a return to earnings growth and the December half results are likely to confirm that,” AMP chief economist Shane Oliver said.