Australian shares start the week off strongly, banks lead the way

We look back at the first two sessions of the week for the ASX 200. Banking and energy shares led the rally, but Afterpay stole the show.

ASX 200 claws back ground from Friday

Australia 200 shares roared back to life in the first two sessions of the week, reclaiming back more than half the territory lost during last Friday’s ugly 5% dive.

The benchmark ASX 200 index finished Tuesday’s session at 5,407.10 points, up 161.20 points, or 3.1%, from Friday’s close of 5,245.90.

The Australian sharemarket maintained momentum from Monday’s session after getting a slightly positive lead from Wall Street overnight.

The Dow Jones Industrial Average rose 26.07 points, or 0.11%, to finish its first session for the week at 23,749.76 points. Although the US index only broke into positive territory in the last half hour of trading.

Australia’s banks, which make up 4-out-of-6 of the ASX’s largest companies by market capitalisation, did most of the heavy lifting.

The ASX 200 Financial index rose 4.1% to 4290.40 points. Energy leant very strong support, up 9.6%, while healthcare was down 1.1% and materials was up 0.7%.

Westpac, NAB rallies trounced by Afterpay

Westpac Banking Corporation (WBC) deferred dividends on Monday when it delivered half-year results. All up, the bank saw its half-year net cash profit plunge 70% to $993 million.

Yet the company’s shares finished Tuesday’s session up 5.7% to $16.20. Westpac couldn’t beat rival National Australia Bank (NAB), which rose 7.8% to $16.99.

Meanwhile, ANZ Banking Group (ANZ) also rose 2.7% to $16.45 and the Commonwealth Bank of Australia jumped 3.6% to $60.85.

Those gains however were outshone by buy now, pay later leader Afterpay (APT), which welcomed Hong Kong’s Tencent Holdings to the register. Monday’s 23.8% rally extended into Tuesday’s session with Afterpay finishing at $38.18, up 41.3% since Friday’s close.

Energy shares also rose strongly over the last two days. Woodside Petroleum (WPL), Australia’s largest independent oil and gas outfit, surged 7.5% to $20.89.

Its biggest local rival Santos (STO) jumped 11.3% to $4.83, while Oil Search (OSH) rose 13.4% to $2.96.

Meanwhile, Origin Energy was the pick of the ‘gentailers’ (generators and retailers), after taking a 20% interest in UK retailer Octopus Energy late last week.

Investors evidently were pleased with the news: the share price was up 14.7% since Friday’s close, to $5.55 on Tuesday, despite no fresh news from the company.

It was a different story at main local rival AGL Energy (AGL) on Tuesday. The company warned of growing headwinds ahead of the next financial year due to Covid-19 and changed its tune about full-year guidance.

Speaking to the Macquarie Australia Conference, AGL boss Brett Redman said energy demand was steady, but the ‘mix is shifting’ and the outlook had become less certain for some sectors. AGL shares were down 4.3% to close Tuesday at $16.36.

In economic news, consumer confidence rose by 5.3% to 89.5 points on Tuesday according to ANZ-Roy Morgan’s Weekly Consumer Sentiment index. This was the fifth consecutive weekly gain.

How to trade the ASX 200

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