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
Frequently Asked Questions about this Article…
The market rose after US Federal Reserve chairman Ben Bernanke said central bank stimulus would continue for the foreseeable future, and investors also focused on jobs data that showed more than 10,400 net jobs created. The S&P/ASX 200 gained 64.3 points (1.31%) to 4965.7 and the All Ordinaries rose 61.5 points (1.26%) to 4946.9.
Bernanke indicated that central bank support through stimulus would continue, reversing concerns that tapering was imminent. For investors this reduced near-term fears of tighter monetary policy, which helped boost equities, commodities and bond markets.
Although unemployment rose to 5.7% in June, investors focused on the better‑than‑expected outcome of more than 10,400 net jobs created. That mix of data, together with Bernanke’s comments, encouraged markets to emphasise the positive news and lift share prices.
Gold stocks surged about 11.5% after the US dollar fell, reflecting the usual inverse relationship between the dollar and commodities. The gold price in Sydney closed at US$1,288.60 an ounce, up US$40.60.
Miners posted gains: BHP Billiton rose $1.01 to $32.84 and Rio Tinto added $1.93 to $54.32. Goldminer Newcrest jumped $1.15 (about 12%) to $11.10, while confirming it was cutting jobs at its Telfer mine in WA.
The big four banks gained: Westpac rose $0.45 to $29.49, NAB gained $0.53 to $29.98, ANZ increased $0.34 to $28.98 and Commonwealth Bank added $1.06 to $71.41.
Yes — the Australian dollar strengthened after Bernanke’s remarks, trading at about US92.71 cents late on the day, up from US91.96 cents. A firmer AUD affects returns for exporters and importers, commodity prices and the value of offshore investments for Australian investors.
Credit markets gained and bond prices rose after the weaker‑than‑expected jobs figures and Bernanke’s remarks. Nomura rates strategist Martin Whetton said there was a massive turnaround in bond markets when Bernanke reminded investors the Fed wasn’t at its optimal unemployment level, effectively suggesting tapering was not about to begin.
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