Australia Shares End Week on High Note Following U.S. Lead

   By Robb M. Stewart 
 

MELBOURNE, Australia--Australian equities rebounded Friday in the wake of a surge on Wall Street as recent worries about when the Federal Reserve will begin trimming its monetary stimulus measures gave way to positive economic news.

A push by the Dow Jones Industrial Average above 16,000 points for the first time set the tone for markets across Asia after Janet Yellen, widely recognized as a dove unlikely to change monetary policy at the Fed, moved a step closer to taking over the top job at the central bank. That followed strong U.S. jobs and manufacturing data that suggests the economic recovery in the U.S. still has traction.

The local benchmark index rose strongly through the course of the session, trimming the week's loss to 1.2%--still the sharpest decline in one and a half months.

"Cyclical names have finished the week on a strong note with industrials leading," said Stan Shamu, a market strategist at IG in Melbourne. "Mining services companies had been a major drag on industrials for most of the week, but have really come to life today."

The local currency remained under pressure, having hit a two-month low late Thursday against the U.S. dollar after the governor of the Reserve Bank of Australia's governor said he remained open to intervention on the exchange rate. Traders have interpreted the comments as further jawboning from central bankers keen to push down a strong Australian dollar that has crimped exporters and added to local costs for mining companies.

The S&P/ASX 200 finished Friday 0.9% higher at 5335.9, the first daily rise of the week.

"Share markets were under pressure again from 'taper' talk over the last week, which resulted in a somewhat volatile ride," said Shane Oliver, head of investment strategy at AMP Capital.

"This is likely just a pause ahead of the resumption of the rising trend as valuations are reasonable, monetary conditions are set to remain very easy and profits are likely to improve next year as global and Australian growth picks up," Mr. Oliver said, adding the benchmark index remained on track to hit 5500 or even higher by year end.

Mining services companies that were weak earlier in the week following a profit warning from WorleyParsons recovered, with Monadelphous Group up 3.5%, Ausdrill up 4.2% and WorleyParsons up 1.8%.

Big mining companies also gained, with BHP Billiton and Rio Tinto both gaining 0.7% after the chairmen of both in separate speeches in recent days said they remain confident China will continue to drive commodities demand.

Shares in the country's four big banks all rose, with Commonwealth Bank up 0.5% and Australia & New Zealand Banking, National Australia Bank and Westpac up 0.7%. The four are still down an average 1.5% for the week.

David Jones gained 2.1% for the day after staging its annual shareholders' meeting, at which Chief Executive Paul Zahra said the retailer is well prepared for the key Christmas trading period. Rival retailer Myer climbed 2.5%.

Write to Robb M. Stewart at [e-mail]