Bargain hunters step in after Monday's fall
The sharemarket bounced back strongly on Tuesday, led by banks and consumer stocks, as investors look to cash in on Monday's $21 billion loss.
The benchmark S&P/ASX 200 Index jumped 64.9 points, or 1.3 per cent, to 5075.4, while the broader All Ordinaries gained 59.6 points, or 1.2 per cent, to 5088.1.
Financial stocks jumped 2 per cent, while consumer staples and consumer discretionary rose 2.8 per cent and 1.3 per cent respectively.
"You've still got Italian elections and the US sequester - we're not surprised to see a couple of bumps," Deutsche Bank head of research sales Glenn Morgan said of Monday's downturn.
Economic data released on Tuesday included retail sales, car sales, the current account deficit and government spending.
Generally the data was positive, with retail sales and government spending beating expectations and the account deficit narrowing more than expected. As a result, retail stocks performed well. Woolworths jumped 3.1 per cent to $35.15 and rival Wesfarmers added 2.7 per cent to $42.20. Treasury Wines gained 3.1 per cent to $5.69.
Department store David Jones pushed up 3.5 per cent to $2.97 and Myer rose 2.5 per cent to $2.85.
"There is still a lot of money sitting on the sidelines, waiting to buy-in at the dips, and it's proving true to form, every time we have one," said Mr Morgan.
The big four banks were the beneficiaries of some of this money coming back into the market. Westpac led the gains, up 2.9 per cent to $31.25, while CBA was 2.3 per cent higher at $68.68, ANZ lifted 1.8 per cent to $28.87 and NAB added 1.6 per cent to $30.59.
Miners were among the losers after the price of iron ore slipped 1.2 per cent to $US148.80 a tonne. BHP lost about 0.5 per cent to $35.40, Rio fell minimally to $63.60 and Fortescue Metals dropped more than 0.5 per cent to $4.34.
Meanwhile, the dollar rose to US102.46¢ after the Reserve Bank kept the official cash rate on hold. The dollar had hit a four-month low overnight, at US101.34¢ but rose to US102.10¢ before the Reserve's decision.
Reserve Bank governor Glenn Stevens said in a statement that the dollar remained higher than expected, given the decline in export prices, and that the demand for credit was low as some households continued to lower debt.