ASX 200 extends gains as bank shares rally

We examine the key events that drove market sentiment over the last few days.

Volatile at times, but ASX 200 is up so far

Australia 200 shares have started the week in positive territory thanks to a strong lead from the nation’s banks, but investors have struggled at times for direction in a volatile market.

The benchmark Australian index finished Wednesday’s session at 5,393.40 points, up 80.30 points, or 1.5% for the day. The result brought meant the ASX 200 had gained 2.9% for the week so far, from Friday’s finish of 5,242.60 points.

This was set up by a positive session on Monday where the index rose about 78 points, or 1.5%, to 5,321.40 points.

Trading was hopeful early on Tuesday when ASX 200 shares were up over 1%, which would’ve made it three straight positive days. But the bears wrestled back control in the afternoon session and the index finished 10 points down, or less than 0.1%, at 5,313.40 points.

The banks did a lot of the work with the ASX 200 Financial index up 3.5% for the first three days of the week to be at 4,265.90 points. Materials leant a hand, up 1.8% for the week so far, while the Energy index was down 1.3%.

Banks hold the fort (for now) in tough conditions

National Australia Bank (NAB), one of Australia’s big four banks, surprised the market on Monday by bringing forward its interim earnings from 7 May. The bank reported interim cash earnings of $1.4 billion, down 51%, thanks to Covid-19.

The bank slashed its dividend and launched a $3.5 billion capital raise – the reason to bring forward the results – to shore up its balance sheet.

NAB shares were changing hands at $16.27, up 3.4% from Friday’s close when the music stopped on Wednesday.

On Tuesday, fellow big four bank Westpac (WBC) informed the market it would cop a $2.2 billion impairment charge on its upcoming results, thanks again to Covid-19. Its shares finished Wednesday’s session at $15.69, up 2.3% from Friday’s close.

Meanwhile, ANZ Banking Group (ANZ), which reports its H1 results on Thursday, rose 4.0% to $16.66, while Commonwealth Bank of Australia (CBA) jumped 3.7% to $61.07.

Major retailer Coles (COL) finished Wednesday’s session down 3.9% to $15.51, after telling the market on Wednesday that sales had returned to previous levels after a Covid-19 panic-buying surge. Main rival Woolworths (WOW) was up 0.4% at $36.03.

On Tuesday Wesfarmers (WES), which used to own Coles Group (COL), gave the market a business update that indicated strong momentum with its hardware and office brands, but budget department stores had struggled. The company’s shares were up 2.3% for the week at $37.49.

In related economics news, the consumer price index for the March quarter rose by 0.3%, its highest level in six years as a result of Australia’s recent bushfires and the Covid-19 pandemic.

How to trade indices

What are your thoughts: do you see bullish or bearish opportunities? Trade accordingly. You can trade indices such as the ASX 200 as well as individual equities – long or short through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) the ASX 200 using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘Australia 200' in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

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