Australia 8217 s All Ordinaries Index touches 5000 mark

Australia’s main composite index the All Ordinaries celebrated Chinese New Year in style, briefly breaking through the 5000 level before slipping back in later afternoon trade. It’s been a tough ride for the Australian market over the past few years – weighed down not only by a rising A$ but also over exposure to commodities including iron ore. We have previously written about the iron ore market and weighting it has to BHP Biliton, Rio Tinto and Fortescue Metals’ earnings – all key index constituents on the Australian stock market.

The tide is now turning and with both the Chinese and Japanese economies showing signs of improvement, Australia’s resource exposures are starting to make up for lost ground. The All Ordinaries index is up around 15% over the past year compared with the S&P500 which has rallied 12% and the Nikkei is up a whopping 24% over the same time period.

Two key stocks to look out for over the next few days in Australia are CBA and BHP. Both are statistically significant to the index and can dictate overall market direction.

These are:

* Commonwealth Bank of Australia (CBA) – Now trading at record high levels and one of the largest banks globally in terms of market capitalisation, around US$108bn on yesterday’s closing price. Market consensus is for interim earnings to come in at $3.655bn with a fully franked interim dividend of 154 cents per share.

* BHP Biliton (BHP) – The global heavyweight in mining, no doubt working hard to regain trust with the market and prove that its recent acquisitions into the US shale gas space will eventually come good. This is the largest stock on the Australian market and by a large factor, its market capitalisation is almost double that of CBA, last estimated at around US$197bn. With production numbers already reported to the market, consensus is for interim earnings of US$5.914bn on revenue of $32.163bn.