Why the ANZ and WBC share prices are firming up
Shares in the major banks have jumped 40-50% in the last 12 months.
Shares in Australia's Big Four banks are among the most traded on the ASX boards on Friday. ANZ (ASX: ANZ) shares were trading 0.8% higher at $28.23, while Commonwealth Bank (ASX: CBA), Westpac (ASX: WBC) and National Australia Bank (ASX: NAB) were up around 0.5% each as of midday.
Why investors are cheering the bank stocks
Much of the improved investor sentiment in the big bank stocks is likely linked to a key piece of data.
Corelogic data on Thursday showed Australian residential property prices rose 13.5% in the year to June 2021, their fastest annual rate since 2004. Over the year, house prices rose 15.6%, while units recorded a 6.8% increase.
The gains were largely driven by continued low mortgage rates, accumulated savings through the COVID-19 restrictions and low housing stock but are particularly good news for banks.
That is because the Big Four banks have the largest exposure to the booming housing market.
Home prices have continued to climb in major cities like Sydney, Melbourne and Brisbane spurring lending, allowing the 4 big banks to reverse nearly $1 billion in bad debt provisions, and boosting their half-year profits and dividends.
Meanwhile, the banks are also set to benefit from a continuing rebound in the Australian economy.
Separate data out on Thursday showed manufacturing is expanding at its fastest pace in almost 3 decades, while job vacancies are at a record, which points to more employment gains ahead. Australia's trade surplus also widened to $9.68 billion in May.
The Australian Industry Group performance of manufacturing index rose to 63.2 in June, the highest monthly result since the index commenced in 1992.
Australian Bureau of Statistics figures also show a 23% rise in job vacancies for the May quarter, taking them 57% higher than their pre-COVID-19 level.
Analysts believe the performance of the major lenders is directly linked to the improving domestic economy, which should prop up lending in the key business and housing segments.
That has already helped bank shares post returns of 40-50% over the last 12 months, but clearly investors are counting on more gains.
Considering buying ANZ or WBC shares?
If you are keen to buy shares in any of the Big Four banks, you should consider investing through an online share trading platform.
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