Bears back in hibernation as shares rally and dollar settles
The sharemarket recovered all of its losses and the Australian dollar was far less volatile.
US Federal Reserve authorities were doing their best to remind short-sellers, via at least three separate speeches, they might have misunderstood the Fed's monetary policy announcement last week — the cause of so much alarm in global bond and currency markets.
For the week, the benchmark S&P/ASX200 climbed 63.8 points, or 1.3 per cent, at 4802.6, while the broader All Ordinaries Index rose 51.6 points, or 1.1 per cent, at 4775.4 points.
Australia's dollar gyrated wildly last week within a 3½¢ range, but this week it traded within a much tighter range and closed around US92.6¢. Strategists said the dollar could finally be trading near its "equilibrium value" for the first time since late 2011.
They also said the dollar's so-called "fair value" might be US90¢ throughout 2013, thanks to recent major adjustments based on weaker Chinese growth, lower commodity prices and movements in global risk assets and yields.
That's a big change from previous years. We looked at some news reports from 2011 this week and one quoted a foreign currency expert warning that the Australian dollar could hit $US1.70 in 2014.
Meanwhile, new figures from the Bureau of Statistics showed it became harder for Australia's unemployed to find work in the past year, with the number of job vacancies falling by 20 per cent.
There are now five unemployed people for every vacant job, with the number of job vacancies falling in the past year and the number of unemployed rising by 50,000.
Australia's most authoritative job vacancy survey, compiled by the Bureau of Statistics, shows there were just 138,700 vacancies in May, down from 177,800 a year earlier.
For the week, Tabcorp lost 14¢, or 4.4 per cent, at $3.05, after Victoria's two big gaming companies won court action against the state government over levies of more than $42 million imposed on them.
Toll Holdings rose 11¢, or 2.1 per cent, to $5.32, after it reaffirmed its earnings forecast despite weaker earnings from its international freight business.
Metcash rose 8¢, or 2.3 per cent, to $3.52. The supermarket group lifted underlying full-year profit by 6.9 per cent to $281 million but has lost market share in its core grocery business as it beds down restructuring and new acquisitions.
Rio Tinto shed 29¢, or 0.5 per cent, to close at $52.37 after the miner decided to retain its diamonds businesses following a review which considered a range of options, including divestment.
Suncorp slipped 20¢, or 1.6 per cent, to $11.92 after it confirmed it was paying back $23 million to customers who did not receive promoted discounts on their insurance policies.
Blackwood rose 0.4¢, or 8.7 per cent, to 5¢ after former billionaire Nathan Tinkler paid a $12 million bill to the coal explorer, which allowed him to avoid moves to freeze his assets.
James Hardierose 17¢, or 1.8 per cent, to $9.39, after a sharp climb in US home prices during April. That was despite its 2013 annual report showing an unexpected jump in the number of asbestos victims filing claims against the company in the year since March 2012.
Frequently Asked Questions about this Article…
The sharemarket recovered this week, wiping out last week's heavy losses. For the week the S&P/ASX200 climbed 63.8 points (1.3%) to 4,802.6, while the broader All Ordinaries rose 51.6 points (1.1%) to 4,775.4.
After a volatile prior week, the Australian dollar traded in a much tighter range and closed around US92.6¢. Strategists suggested the dollar may be trading near its 'equilibrium value' and pegged a so‑called fair value at about US90¢ through 2013, citing weaker Chinese growth, lower commodity prices and shifts in global risk assets and yields.
Yes. Multiple speeches from Federal Reserve officials aimed to clarify last week's monetary policy announcement and signalled that short‑sellers might have misread the Fed. Those remarks helped ease alarm in global bond and currency markets and supported the market rebound.
The ABS showed job vacancies fell 20% over the past year to 138,700 in May (from 177,800), while unemployed people rose by about 50,000, leaving roughly five unemployed people for every vacancy. For investors, slower labour demand can signal softer consumer spending and pressure on sectors sensitive to domestic demand.
Tabcorp shares fell 14¢ (4.4%) to $3.05 after Victoria's two large gaming companies won court action against the state government over levies of more than $42 million that had been imposed on them.
Toll Holdings rose 11¢ (2.1%) to $5.32 after reaffirming its earnings forecast. Management’s confirmation of guidance helped offset concerns about weaker earnings from its international freight operations.
Metcash rose 8¢ (2.3%) to $3.52 after lifting underlying full‑year profit by 6.9% to $281 million, though it has lost some grocery market share amid restructuring and acquisitions. Rio Tinto slipped 29¢ (0.5%) to $52.37 after deciding to retain its diamonds businesses following a review that considered divestment. Suncorp dropped 20¢ (1.6%) to $11.92 after confirming it will repay $23 million to customers who missed promoted insurance discounts.
Yes. Blackwood rose 0.4¢ (8.7%) to 5¢ after former billionaire Nathan Tinkler paid a $12 million bill to the coal explorer, avoiding moves to freeze his assets. James Hardie gained 17¢ (1.8%) to $9.39, helped by a sharp rise in US home prices in April, although its 2013 annual report showed an unexpected jump in asbestos claims against the company.
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