Australian shares ended 0.5 percent higher on Monday, led by gains in financials, but resources shares were weighed under by a slew of disappointing earnings. Shares in Australian mining services firms fell sharply after they warned they will struggle to increase revenue as big miners slash spending in the face of collapsing commodity prices.
The S&P/ASX 200 index rose 26.46 points to 5,908 at the close of trade. The benchmark fell 0.4 percent on Friday. The index rose last week to its highest since May 2008. Many analysts see the market trading around 5,650-5750 points in the near-term even as the index inches higher toward a seven-year high.
New Zealand's benchmark NZX 50 index ended up 0.09 percent or 5.41 points to finish the session at 5,754.36. Sentiment was bouyed as the Dow and S&P500 ended at record highs on Friday after the Greek and euro zone finance ministers reached a deal to extend Greece's financial rescue plan by four months.
Analysts expect Australian shares to offer lower or modest returns over the next 12-18 months. The index, which is up over 9 percent so far this year, is trading at 14.2 times its 12-month forward earnings, higher than its 10-year average. Financials led the gains on Monday with high dividend-yield stocks such as National Australia Bank and Westpac up about 0.6 percent. AMP rose 1.7 percent. A "very large" futures sell order in the morning had the market fall 0.2 percent earlier, said Shawn Hickman at Market Matters.
Mining contractors bore the brunt of a resources rout with Macmahon Holdings diving 41 percent and UGL dropping 15 percent. Vocation hit an all-time low after flagging writedowns. Bluescope Steel plummeted over 7 percent after a weak earnings outlook. Elsewhere, speciality pet-care retailer Greencross Ltd's shares jumped as much as 10.5 percent after strong earnings, while Regis Healthcare hit a record high.
New Zealand telecommunications network operator Chorus was up 1.1 percent at NZ$2.86 as a fall in first half profit matched expectations and it maintained its full year earnings guidance. Fletcher Building, the market's biggest stock by capitalisation, was up 0.7 percent to NZ$8.51, as it clawed back some of the 4 percent slide incurred after it was heavily sold following its first half result. Accounting software developer Xero maintained its strong run of last week, up 1.5 percent at NZ$20.00 on modest volumes. Other major results due this week include national carrier Air New Zealand, power company Mighty River Power and retirement village operator Metlifecare.
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