Optimism and earnings lift market
Market watch top headlines
A record $2.9 billion loss from Rio Tinto didn't dampen investor enthusiasm in a week of earnings results when the Australian share market climbed to a post global financial crisis high.
Rio Tinto's first-ever loss, $US2.99 billion for 2012, was a downbeat end to a week that began with a surprise boost in first-half profit from JB Hi-Fi.
The electrical goods retailer's $82 million net profit for the six months to December 31, up three per cent on the prior corresponding period, caused a one-day 17 per cent surge in its share price and raised optimism around retail stocks.
Investor confidence lifted the S&P/ASX200 to a five-year high, finishing on Friday at 5033.9, up 1.2 per cent for the week.
A 9.3 per cent increase in first half profit to $1.3 billion for conglomerate Wesfarmers consolidated the mood, with strong contributions from its Coles, Bunnings and Kmart retail businesses offsetting a drag from its coal operations.
Also starring was the Commonwealth Bank, with a record first half net profit of $3.66 billion,
RBS Morgans private client adviser Ken Howard said it was a good week for financials and consumer discretionary stocks, while increasing confidence in the market was fuelling the return of investors.
"A lot of what's been driving the market, with Telstra and the Commonwealth Bank, is where people are chasing yield," he said.
"Money is moving out of cash and moving into shares."
Telstra last week posted a near nine per cent rise in first half profit to $1.6 billion.
In other key results, ANZ posted a 20 per cent drop in net profit to $1.36 billion for the December quarter, David Jones reported first half total sales down 0.7 per cent to $1.005 billion, and Downer EDI reported a net profit of $94 million in the six months to December 31, up from $84.9 million in the prior corresponding period.
Construction giant Leighton Constructions posted a net profit of $450.1 million in the 12 months to December 31, compared with a $285.5 million loss for calendar 2011.
Stockland reported a $147.1 million interim net loss, from a $307.6 million net profit in the previous corresponding period, and flagged lower earnings for the full year.
However Stockland securities finished the week five per cent higher after the builder announced plans to rationalise its residential property portfolio.
Mr Howard said while the property sector was expected to be flat in 2013, investors were starting to think about 2014.
"I think a lot of the market is buying an economic recovery," he said.
Rio Tinto shares fell on Friday but Mr Howard said it was possibly profit-taking, rather than a vote on the miner's fundamentals, that drove the 2.6 per cent fall to $70.15.
However he said the resources sector would have a key role to play in maintaining the sharemarket momentum next week.
"I think for the market to keep running the materials (stocks) need to drive it a bit," he said.
BHP Billiton and Fortescue Metals are among the resource stocks to post results next week.
Peter Trute, AAP Senior Finance Writer