Stocks close modestly higher

The local market has turned up in late trade, as miners and Commonwealth Bank boosted sentiment.

The Australian sharemarket has ended on a high for a second straight day, as a re-rating of Commonwealth Bank shares and strength in the miners offset weakness in the energy space.

At the closing bell, the benchmark S&P/ASX 200 index had risen 12.2 points, or 0.23 per cent, to 5,239.9, while the broader All Ordinaries index advanced 10.5 points, or 0.20 per cent, to 5,337.1.

The steady showing came after a red open, with the market only reaching positive territory a little over an hour before the session’s close.

Deutsche Bank analysts said challenges to the market continued to lurk, although a recent 5 per cent pullback may prove the worst of any market backlash.

“Global data surprises have turned negative, and policy uncertainty is high,” strategist Tim Baker said.

“But valuations appear less worrying.”

Deutsche has turned bullish on the mining sector, but is wary on the banks and unwilling to support defensive stocks, given their relative high values against cyclicals.

“Our year-end target implies some upside, but we see near-term direction flat-to-down due to challenges at the micro level,” Mr Baker said.

“Conviction is very low – the number of ‘buy’ ratings is around record lows, and subdued volatility suggests investors feel likewise. Stock correlations continue to drop, favouring stock-picking.”

Commonwealth Bank led the way with a 1.9 per cent bounce to $71.50 as Goldman Sachs and Macquarie both upgraded their views on the company.

NAB also shone in rising 1.4 per cent, while Westpac and ANZ were only able to tack on 0.6 and 0.2 per cent, respectively.

The big miners also stood out after base metals largely rose through offshore trade.

BHP Billiton rallied 1.4 per cent to $20.07, Rio Tinto climbed 0.5 per cent to $47.07 and Fortescue recovered 0.9 per cent to $4.70.

It was a contrasting story in energy as a 3 per cent skid in crude prices forced the big names into the red.

Santos slumped 3.8 per cent to $3.41, Origin dipped 1.4 per cent to $4.90 and Woodside weakened 1.1 per cent to $27.08.

All three ended off their lows for the session, however, as crude prices ticked up marginally in Asian trade.

In retail, Coles owner Wesfarmers added 0.5 per cent, Woolworths ended flat and Myer lost 1.5 per cent after its earnings met guidance but fell short of expectations.

Among other blue chips, Telstra lost 1 per cent to $5.02, while Qantas backtracked 1.5 per cent to $3.25.

Elsewhere, Seven West Media slipped 2.8 per cent as its acquisition of The Sunday Times was waved through by the ACCC.

Meanwhile, the Australian dollar ended the local session around US74.7c, with a fall tied to softer-than-expected jobs numbers offset by a push toward growth-oriented currencies late in the day.