The market has closed firmly in the black. Picture: Lincoln Baker/The West Australian.
The West AustralianThe market has closed firmly in the black. Picture: Lincoln Baker/The West Australian.
The Australian sharemarket bounced today but metals, currency and credit markets failed to match the optimism in equities as Chinese borrowing costs continued to climb and the yuan traded at one-year lows.
The S&P/ASX 200 index struggled in the early session but ramped to close 44.1 points, or 0.83 per cent, up at 5338.1 with a heavy surge at the finish as tracking fund managers adjusted for the quarterly index reshuffling.
Overnight sentiment was boosted by a bounce in the Philadelphia Fed in index, but investors ignored the ongoing signs of weakness in the interest rate sensitive US housing market.
US existing home sales fell 0.4 per cent, the sixth drop in seven months since US Federal Reserve hinted at tapering its bond purchases, but markets remain sceptical the Fed will plough on with further stimulus cuts if the data deteriorates much further.
The Shanghai composite rallied from the red to trade 0.7 per cent up at the close of the ASX despite the Chinese Beige book business survey showing the world’s second biggest economy had slowed this quarter.
The rally in China was dominated by energy giant PetroChina which beating earnings forecasts.
Foreign investors sold a record $US1.5 billion in Chinese equities in the week until yesterday, while global emerging markets saw $US4.1 billion of outflows and Japan $US10 billion. US markets absorbed the bulk as $US10.5 billion flowed into US equities and $US3.7 billion into bonds.
Japanese markets were closed for a public holiday.
The Australian dollar rose US0.4¢ to US90.60¢ while government 10-year yields edged up 2.5 points to 4.153 per cent
Gold bounced $US10 from its overnight low to $US1333, copper slumped 1.9 per cent to $US6430 a tonne and spot iron ore was marginally firmer at $US110.70 a tonne.
IG market analyst Evan Lucas said the Australian market edged higher following “kneejerk responses” to news from the US Federal Reserve on Thursday.
“The low macro news environment is moderating any real prominent moves,” Mr Lucas said.
“What is becoming clear as markets approach the end of the first quarter is there have been three key themes that have impacted the full spectrum of instruments over this period - the US winter, Chinese growth and geo-political issues in Eurasia.”
He said overnight influences had been positive for the local market, following soft diplomacy from the EU and Russia appearing to step back from further escalations.
Locally, the big miners and the big four banks all posted strong gains on Friday.
Westpac rose 36 cents to $33.60, Commonwealth Bank was 69 cents higher at $75.66, ANZ gained 13 cents to $32.25, and National Australia Bank lifted 26 cents to $34.67.
BHP Billiton rose 38 cents to $35.58, Rio Tinto added 57 cents to $61.37 and Fortescue Metals was eight cents stronger at $4.98.
Meanwhile, internet company iiNet was up seven cents at $7.67 after co-founder and chief executive Michael Malone announced his resignation.
Shares in grocery wholesaler Metcash dropped 30 cents, or 9.5 per cent, to $2.85 after the company downgraded its earnings and announced it would cut dividend payments to fund a $480 million capital expenditure program.
On Wall Street overnight, stocks bounced back from the previous day’s Federal Reserve-sparked losses with investors encouraged by favourable US economic data.
The Dow Jones Industrial Average lifted 108.88 points, or 0.67 per cent, to 16,331.05 points.
The broader All Ordinaries index rose 41.3 points, or 0.78 per cent, at 5354.
The June share price index futures contract was 34 points higher at 5331, with 27,106 contracts traded.
National turnover was 2.4 billion securities worth $5.3 billion.