The sharemarket has shot back above 5700 points, lifted by a rally in bank shares, which enjoyed their best day in eight months on relief that new capital requirements weren’t as tough as many had feared.

The S&P/ASX200 climbed 0.8 per cent to 5732.1, with gains in the big four banks alone adding more than 50 points to the benchmark index.

ANZ soared 3.9 per cent, Westpac gained 3.8 per cent, NAB rose 3.1 per cent and Commonwealth Bank closed 3 per cent higher, for a cumulative gain of about $14 billion in value.

The announcement by banking regulator APRA on Wednesday morning removed some of the uncertainty weighing on bank shares which had led to a more than 10 per cent slump in the sector from recent highs in early May.

“We believe the major banks will be able to comfortably meet the changes to capital requirements outlined today,” said Morgan Stanley equity analyst Richard Wiles who doesn’t see a need for capital raisings. “We view today’s announcement as positive, even though there is still some uncertainty on mortgage risk weight changes.”

The chunky gains in the banks disguised the fact that overall there were slightly more losers than winners on the ASX200 as numerous blue chips ended in the red.

The biggest drag came from BHP Billiton, which fell 1.1 per cent after reporting output declines in coal and petroleum for the year and flagging it expects to book a charge of $US546 million due to a strike at its Escondida copper mine in Chile.

Rio Tinto extended Tuesday’s losses, losing another 0.7 per cent a day after reporting disappointing iron ore production results.

Telstra also continued its recent selloff, falling 1.7 per cent to a three-month low of $4.11 amid growing speculation the telco might announce a dividend cut at next month’s annual results.

“With the market regaining confidence that the banks are likely to maintain current dividend policies in the near term, concerns surrounding Telstra’s ability to maintain theirs are now at the forefront of investors’ minds,” said ASR Wealth Advisers senior adviser Gary Huxtable.

“As such we’re seeing a continued rotation out of Telstra into more favourable yield stories.” 

http://www.smh.com.au/business/markets-live/markets-live-banks-set-the-pace-20170718-gxe0df.html