Sharemarket hits a two-year high on BHP surge

The ASX 200 index lifts to a two-year high as BHP shares surge on an activist hedge fund’s restructuring play.

The ASX 200 index lifts to a two-year high as BHP shares surge on an activist hedge fund’s restructuring play.

The local sharemarket has jumped almost 1 per cent to open the week, rocketing to a two-year high as a push for a BHP restructure boosted that group’s shares almost 5 per cent.

At the close, the benchmark S&P/ASX 200 index surged 50.4 points, or 0.86 per cent, to 5,912.9, while the broader All Ordinaries index bounded 46.3 points, or 0.78 per cent, to 5,948.9.

It represented the best finish for the local bourse in two years and again has it closing in on the magical 6,000 point mark, which hasn’t been reached since February, 2008.

However, despite a strong push past the 5,900 point mark, the market still needs to clear resistance to make a run at 6,000.

“This week the ASX 200 needs to resolve its own battle,” IG chief market strategist Chris Weston said.

“If we look at the daily chart of the ASX200 we can see the bulls are happy to support and defend the index at the former top of the trading range at 5,830, but we really need to see a move above 5,913, where on this development we will be talking about 6,000.

“If I have to make a choice I would be calling a break to the upside (but) there is plenty that can go wrong here.”

The local market had started brightly on a strong offshore lead, with investors quickly shrugging off geopolitical worries around Syria.

“The lesson of 2016 for traders and investors was ‘don’t panic’ so it wasn’t really a surprise Friday that traders took the missile attack on Syria by the United States in their stride,” Greg McKenna, chief market strategist at CFD and FX Provider AxiTrader, said.

Reporting season in the world’s largest economy kicks into gear this week, with a need for strong results to justify US markets holding near record highs.

Closer to home, a 7 per cent slump in iron ore prices to a four-month low appears not to faze investors.

BHP Billiton surged 4.6 per cent to $25.73, while Fortescue dipped 0.2 per cent to $6.10 and Rio Tinto won 1.4 per cent to $60.84.

BHP stood out after activist investor Elliott Management Corp – which owns 4.1 per cent of the miner – called for a simplification of the business to unlock extra value for shareholders.

In energy, Santos tacked on 0.5 per cent to $3.87, while Woodside rose 0.7 per cent to $33.21 as oil prices climbed sharply on the Middle East troubles

In finance, the big four banks were also in favour, with ANZ advancing 0.9 per cent, CBA rising 0.8 per cent and NAB and Westpac lifting 0.6 per cent.

Among other blue chips, telco giant Telstra edged up 0.4 per cent to $4.58, while national carrier Qantas added 0.5 per cent to $3.94.

Meanwhile, the Australian dollar ended local trade around a two-month low of US74.8c, weighed by weakness in Australia’s key export commodity.