Bernanke gives market a shot in the arm
The benchmark S&P/ASX 200 Index rose 64.3 points, or 1.31 per cent, to 4965.7, while the broader All Ordinaries gained 61.5 points, or 1.26 per cent, to 4946.9.
The market soared on US Federal Reserve chairman Ben Bernanke's comments that central bank support through stimulus would continue for the foreseeable future, after flagging an end to it sent markets diving last month.
Job numbers provided the other big influence, with investors focusing less on the bad news of a rise in unemployment to 5.7 per cent in June and more on the better-than-expected 10,400-plus net jobs created.
"The market wanted to focus on the positive," CMC Markets senior trader Tim Waterer said.
The heavy falls in the US dollar sent commodities and especially gold stocks higher as the two tend to have an inverse relationship.
Gold stocks shot up 11.5 per cent, but there was room for improvement with the sector having had a horror run of late as the gold price fell. Goldminer Newcrest confirmed it was cutting jobs at its Telfer mine in WA as it gained $1.15, or 12 per cent to $11.10.
Among miners, BHP Billiton was up $1.01 to $32.84, while Rio Tinto was $1.93 higher at $54.32.
The big four banks made gains.
Westpac shares lifted 45¢ to $29.49, NAB gained 53¢ to $29.98, ANZ rose 34¢ to $28.98 while Commonwealth Bank rose $1.06 to $71.41.
The gold price in Sydney closed at $US1288.60 an ounce, up $US40.60.
The Australian dollar was higher after Dr Bernanke's comments and was trading late on Thursday at US92.71¢, up from US91.96¢.
Credit markets also gained ground as the weaker-than-expected jobs figures boosted bond prices.
Nomura rates strategist Martin Whetton said it had been a strong session for the bond market, driven by Dr Bernanke's comments and the jobs data.
"We saw a massive turnaround in bond markets earlier this morning when Bernanke spoke and reminded everyone that the Fed is not at its optimal unemployment level yet, effectively giving people the idea that tapering is not about to begin," Mr Whetton said. AAP
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The sharemarket rose about 1.3% after US Federal Reserve chairman Ben Bernanke signalled that central bank stimulus would continue, which boosted investor risk appetite. Stronger-than-expected payroll gains (10,400-plus net jobs) also helped, even though unemployment ticked up to 5.7% in June. The benchmark S&P/ASX 200 added 64.3 points to 4,965.7 and the All Ordinaries gained to 4,946.9.
Bernanke’s comments suggested the Fed would keep pumping money into the economy for the foreseeable future, easing fears of an immediate tapering of asset purchases. That reassurance lifted equities, helped bond prices, and pushed commodity-linked sectors higher — a key signal for investors watching market liquidity and risk assets.
Investors focused on the positive side of the jobs report — over 10,400 net jobs were created — despite unemployment rising to 5.7% in June. The stronger-than-expected job additions, combined with Bernanke’s remarks, encouraged markets to concentrate on growth momentum rather than the uptick in unemployment.
Gold stocks leapt about 11.5% as the US dollar weakened, a common inverse relationship with commodities. The gold price in Sydney closed at US$1,288.60 an ounce, up US$40.60. Newcrest, a major gold miner, gained about $1.15 (12%) to $11.10 even as it confirmed job cuts at its Telfer mine in WA.
Miners benefited from the commodity-friendly moves: BHP Billiton rose by $1.01 to $32.84, while Rio Tinto increased $1.93 to $54.32, reflecting the broader lift in resource stocks after the Fed comments and dollar weakness.
All four major banks gained during the session: Westpac rose $0.45 to $29.49, NAB gained $0.53 to $29.98, ANZ increased $0.34 to $28.98, and Commonwealth Bank climbed $1.06 to $71.41, benefiting from the overall positive market sentiment.
The Australian dollar strengthened following Bernanke’s comments, trading at about US92.71 cents late in the session, up from roughly US91.96 cents, as investors reassessed global liquidity and commodity flows.
Credit markets gained and bond prices strengthened after the weaker-than-expected jobs figures and Bernanke’s reassurances. Nomura rates strategist Martin Whetton noted a strong session for bonds, saying Bernanke’s remarks reminded markets the Fed wasn’t yet at its optimal unemployment level — effectively signaling that tapering was not imminent.
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