Close The Australian sharemarket rose strongly in afternoon trade, reversing early losses, after bargain hunters sought out beaten-down banking shares and the RBA kept interest rates steady.
At the close, the benchmark S&P/ASX200 index was up 54 points, or 1.3 per cent, at 4276.1,
after earlier falling about 0.7 per cent lower and hitting a 12-month low. The broader All Ordinaries index gained 49.1 points, or 1.2 per cent, to 4299.7.
Financial stocks led the resurgence, jumping 2.1 per cent, materials reversed earlier losses and gained 0.4 per cent and energy stocks rose 1.4 per cent.
need2know:
- Asian shares reverse course as mood lifts
- The dollar rises to 84.5 US cents on RBA
- Oil extends losses to four-week lows near $US71
- Gold inches up to $US1207
- Dow futures are 12 points higher at 9608
Economists had widely predicted the Reserve Bank would leave rates on hold today, but the decision still contributed to the market's mood lift, with the bank's statement helping dispel some gloom over the global economic outlook.
Bell Potter Securities senior client adviser Stuart Smith said the local market was ‘‘ridiculously cheap’’ and had touched a nadir this morning when the S&P/ASX 200 touched 4182 points.
‘‘Valuations are compelling at a time when risk aversion is lifting and consensus of market behaviour is losing momentum,’’ he said. ‘‘We are going down by the lift hopefully reaching the basement, and then up by the stairs.
‘‘This is the time for the young bull.’’
Bilfinger shelves IPO
The choppy market forced German construction group Bilfinger Berger to shelve a $1.4 billion float of its Australian unit, Valemus, which had been due to list on July 12.
Dealers said the withdrawal of the largest IPO this year suggested other IPO hopefuls would have have to be repriced more attractively, or put on hold indefinitely.
The Queensland state government denied there were any changes in its IPO plans for the QR National coal transport business, which could be worth up to $7 billion, after the Valemus float was pulled.
Banks reversed course during the day, finishing about 2.5 per cent higher as word spread of short covering large positions held against some banking stocks.
NAB storms ahead
National Australia Bank fell 1 per cent in opening trade, but led the sector higher by the close, finishing up 68 cents, or 3 per cent at $23.40. Westpac gained 62 cents, or 3 per cent, to $21.41, ANZ added 62 cents, or 3 per cent, at $21.51, and Commonwealth Bank advanced $1.10, or 2.3 per cent, to $48.89.
Mr Smith said the market could tolerate more risk given the largest trade surplus in 14 months, and the short positions held in bank stocks.
‘‘BHP, Xstrata and Rio virtually announced in concert re-starting of shelved projects, all to the good,’’ he added.
BHP Billiton firmed 17 cents to $37.15, while Rio Tinto backtracked 15 cents to $65.10.
Oil stocks strengthened during the day, with Santos reversing its downward momentum to finish up 16 cents, or 1.29 per cent, at $12.56. Oil Search rose 17 cents, or 3.1 per cent, to $5.66 and Woodside Petroleum added 77 cents, or 1.9 per cent, to $41.65.
Consumer discretionary stocks also erased the morning’s losses. Department store owner David Jones added 5 cents, or 1.1 per cent, to $4.42, while its rival Myer firmed 2 cents to $3.26 and JB Hi-Fi gained 14 cents to $19.00.
Investors seek Telstra
Investors piled into Telstra, sending the stock up 8 cents, or 2.6 per, cent to $3.19 on turnover of more than 46.5 million shares.
Telstra was the top traded stock by volume with turnover worth $149.3 million.
In news, CSR said it has sold its Asian businesses to the Rockwool Group for $128 million. CSR’s shares firmed 0.5 cents to $1.76.
Shares in Macarthur Coal gained 9 cents to $12.84 after the company upgraded its annual profit guidance for fiscal 2010.
Sigma Pharmaceuticals' shares held steady at 39.5 cents after flagging due diligence by Aspen Pharmacare Holdings will continue despite the expiry of an exclusivity agreement between the two companies expiring on Monday.
Preliminary national turnover reached 1.3 billion shares, worth $4 billion, with 515 stocks trading up, 402 down and 326 steady.
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AAP, with BusinessDay