Market welcomes retreat from fiscal cliff
3 Jan 2013 THE AGE - MARTIN PRETTY - MARTIN PRETTY IS HEAD OF RESEARCH AT INVESTORFIRST SECURITIES.
THE sharemarket began the 2013 trading year on a bright note, climbing more than 1 per cent to a 19-month high as investors welcomed a deal that averted the fiscal cliff in the US.The benchmark S&P/ASX 200 Index was up 57 points, or 1.23 per cent, at 4705.9 on Wednesday, while the broader All Ordinaries rose 58.3 points, or 1.25 per cent, to 4722.9.The market, which was closed on Tuesday for New Year's Day, opened up 0.3 per cent and extended gains as investors took their cue from good news out of Washington regarding the US fiscal cliff.The US Congress and the White House agreed on measures to avoid steep tax rises and spending cuts - dubbed the fiscal cliff - coming into effect at the start of 2013.While the result was not a comprehensive solution, the US economy could have slid back into recession in the absence of a deal."Asian markets have sprung to life on the first trading day of 2013, with big gains across the risk space," IG Markets strategist Stan Shamu said in a research note.Locally, the gold sector was the best performer, rising 3.17 per cent. Metals and minerals (up 2.51 per cent) and materials (up 2.29 per cent) also had a positive day.BHP gained 74? to $37.84, while Rio Tinto was $1.61 firmer at $67.62.Financial stocks were 0.8 per cent higher, with the four big retail banks all posting modest gains. ANZ climbed 4? to $25.09, CBA advanced 54? to $62.72, NAB rose 10? to $25.10 and Westpac was 6? higher at $26.10.Gindalbie Metals said it had shipped its first cargo of magnetite from the Karara iron ore project in Western Australia after extensive delays. In percentage terms, Gindalbie was the second-best performing stock in the top 200, climbing 10 per cent to 27.5?.The spot price of gold in Sydney was $US1680 an ounce, up $US16.66.Meanwhile, bond futures prices fell sharply after the fiscal cliff deal.The March 10-year bond futures contract was trading at 96.615 (implying a yield of 3.385 per cent), down from 96.745 (3.255 per cent) on Monday. The three-year contract was at 97.200 (2.800 per cent), down from 97.320 (2.680 per cent).JPMorgan interest rate strategist Sally Auld said futures prices opened lower and continued to fall in the lead up to the vote.