Bargain hunters step in after Monday's fall
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.
Frequently Asked Questions about this Article…
The sharemarket rallied as bargain hunters stepped in, with investors buying into banks and consumer stocks after Monday's $21 billion loss. The S&P/ASX 200 jumped 64.9 points (1.3%) to 5075.4 and the All Ordinaries gained 59.6 points (1.2%) to 5088.1.
Financial stocks led the recovery, jumping about 2%. Consumer staples rose roughly 2.8% and consumer discretionary climbed about 1.3%, reflecting renewed buying interest in banks and retail names.
Retail stocks did well after positive economic data: Woolworths rose 3.1% to $35.15 and Wesfarmers gained 2.7% to $42.20. Stronger-than-expected retail sales and government spending, plus a narrower current account deficit, helped lift the sector.
The big four benefited from flows back into the market: Westpac led gains, up 2.9% to $31.25; Commonwealth Bank (CBA) was 2.3% higher at $68.68; ANZ rose 1.8% to $28.87; and NAB added 1.6% to $30.59.
Miners slid after iron ore prices dipped about 1.2% to US$148.80 a tonne. That pressure saw BHP fall roughly 0.5% to $35.40, Rio Tinto slip slightly to $63.60, and Fortescue Metals drop a bit more than 0.5% to $4.34.
The Australian dollar strengthened after the Reserve Bank held the official cash rate. It rose to about US102.46¢ (it had hit a four-month low around US101.34¢ overnight and was near US102.10¢ before the RBA decision). RBA governor Glenn Stevens noted the dollar remained higher than expected given lower export prices and subdued credit demand.
Yes. Analysts in the article pointed out ongoing geopolitical and policy risks — including upcoming Italian elections and the US sequester — that can cause short-term bumps. The piece also notes a lot of money still sits on the sidelines, ready to buy dips, which can amplify volatility.
Tuesday's data pack included retail sales, car sales, the current account deficit and government spending. Retail sales and government spending beat expectations and the current account deficit narrowed more than expected, which helped lift retail stocks and the broader market.
Call 1300 880 160
Start a chat
Schedule a call
