Going higher on wait-and-see approach
THE sharemarket has finished higher after investors sat on their hands ahead of the US presidential election.
7 Nov 2012 THE AGE - STEWART OLDFIELD - STEWART OLDFIELD IS AN ANALYST AT INVESTORFIRST SECURITIES.
THE sharemarket has finished higher after investors sat on their hands ahead of the US presidential election.The local market experienced quiet trading conditions as the Reserve Bank left the cash rate on hold and stayed out of the market to watch the Melbourne Cup.At the close, the benchmark S&P/ASX 200 Index was up 10.7 points, or 0.23 per cent, at 4484.8.IG Markets analyst Stan Shamu said investors around the world had put their investment decisions on hold until the outcome of the US presidential election was decided."It's a close call and investors would rather react than try to predict any outcome from the elections, which is why we're flat on the major markets," he said."We've seen a fairly flat session across the region."Local investors believe they may have to wait until next year for another interest rate cut unless conditions deteriorate on a global scale.Local stocks started in the red yesterday, but improved throughout the day on the back of a gains in the financial and materials sectors. Westpac was up 22? at $25.57, extending gains from Monday when the bank reported a lift in full-year cash earnings.ANZ rose 9? to $25.25, CBA was up 8? at $57.48 and NAB advanced 21? to $25.05.Mining heavyweight Rio Tinto posted a 62? gain to $59.50 while rival BHP Billiton fell 1? to $34.81.Trading volumes were low, with national turnover at 1 billion securities worth $2.5 billion.Meanwhile, the dollar rallied to its highest level in almost six weeks after the RBA decision to keep the cash rate on hold.Late on Tuesday the dollar was trading at US104.27?, up from US103.68? on Monday, after rising as high as US104.37?.Commonwealth Bank currency strategist Joseph Capurso said the RBA's decision boosted demand for the currency."The market was finely balanced ahead of the decision, so the Aussie rocketed higher," he said.Mr Capurso said a clear victory by either President Barack Obama or Republican challenger Mitt Romney, along with wins in Congress for their respective parties, would be good news for the currency."If it's a pretty clear victory for one party or another then it will probably be good for the Aussie dollar," he said."But if it is not, then you might see the US dollar lift, pushing the Aussie down."The December 10-year bond futures contract was trading at 96.900 (implying a yield of 3.100 per cent), down from 96.920 (3.080 per cent). The three-year contract was at 97.340 (2.660 per cent), down from 97.420 (2.580 per cent).