Bargain hunters drive market into black
BARGAIN-HUNTING investors dragged the sharemarket into the black yesterday, ending a week of heavy losses. Stocks completed a dramatic turnaround following a steep fall at the beginning of the session.
BARGAIN-HUNTING investors dragged the sharemarket into the black yesterday, ending a week of heavy losses. Stocks completed a dramatic turnaround following a steep fall at the beginning of the session.The S&P/ASX 200 Index finished up 48.7 points, or 1.2 per cent, at 4034.8, after dropping more than 5 per cent in early trading.CMC Markets chief analyst Ric Spooner said buyers waiting on the sidelines had moved in after a nervous start to trading. He expected the market would stage a slow recovery within a year. "The most likely outcome is we are in for a long period of relatively weak economic conditions around the world," he said. "We will see a reasonable recovery from here [but] I think it's going to be choppy."Equity Trustees' head of asset management, Shaun Manuell, expected companies would be releasing cautious outlook statements."No one's going to put their head too far above the parapet and suggest they're going to have a stellar year because there's just too much nervousness out there," he said.Mr Manuell said Australia's economic foundations were sound, with growth expected next year and unemployment now at low levels.He said investor nerves had forced the market down in the past week."We could be talking ourselves into a recession because of all the fear that's being spouted," Mr Manuell said. "The underlying fundamentals aren't too bad. They certainly don't correspond with the moves we've seen in the last week."Australian School of Business associate professor Jerry Parwada said the market had been gripped by fears of global economic fallout.He said a downgrade in the US credit rating and concerns about economic instability in Europe had rocked investors' confidence."Uncertainty is stalking the market, even though there isn't a logical reason for the markets to melt down," Professor Parwada said.The big four banks rose and the financial sector led yesterday's gains, up 2.2 per cent. Commonwealth gained $1.66 to $47.28, ANZ moved up 51? to $19.01 and Westpac advanced 42? to $19.26.NAB reported it was on track to deliver an annual profit higher than $5.5 billion. It finished up 60?, or 2.9 per cent, at $21.50.The energy index increased by 1.8 per cent and the materials sector picked up 1.1 per cent. Index heavyweight BHP Billiton was down 45?, or 1.2 per cent, at $37.05. Rio Tinto advanced $1.11, or 1.6 per cent, to $69.74.