Buoyant market builds on earlier gains
THE sharemarket finished higher yesterday, building on last week's record gains, after the Australian Labor Party voted on the weekend to end the ban on uranium exports to India, removing a hurdle to growth for producers such as BHP Billiton and Paladin Energy.
THE sharemarket finished higher yesterday, building on last week's record gains, after the Australian Labor Party voted on the weekend to end the ban on uranium exports to India, removing a hurdle to growth for producers such as BHP Billiton and Paladin Energy.Investors also welcomed news that Italy's cabinet, led by new Prime Minister Mario Monti, had agreed to pursue ?30 billion worth of austerity and growth measures in an attempt to shore up the country's finances ahead of Thursday's summit of European leaders.The benchmark S&P/ASX 200 Index rose 33.3 points, or 0.78 per cent, to 4321.3, taking the index above 4300 points for the fifth time in four months. In the past six days, the index has rallied 8.7 per cent.Trade between Australia and India hit $18.4 billion in 2010. The Labor Party's decision to lift the ban on sales of uranium to the non-signatory to the global nuclear non-proliferation treaty will pave the way for the Gillard government to negotiate a nuclear-safeguards accord and pursue closer diplomatic ties with the country.Materials and energy stocks led the charge on the local bourse as investors reacted positively to the news, with junior uranium miners outperforming their sector.Energy Resources of Australia closed up 14?, up 9.8 per cent, to $1.57. Paladin Energy grew 4?, up 2.4 per cent, to $1.71.BHP Billiton rose 61?, up 1.7 per cent, to $37.26, consolidating strong moves on Friday night in the London price of BHP shares.Rio Tinto Group, the world's third-biggest miner, grew 68?, up 1 per cent, to $67 a share."There's some positive momentum, but we need some good news to keep it going," Cameron Peacock, a strategist at IG Markets, said.The news failed to excite the Australian dollar as traders held their breath before today's interest rate decision. Despite a 0.5? rally in the morning, it settled on $US1.02.Economists remained split on whether the Reserve Bank would cut rates, but markets were tipping a rate cut of 0.25 percentage points. Rates were cut by by 0.25 percentage points on Melbourne Cup day one month ago, the first time in 2 years.It is an important week for economic data. Investors can expect news of interest rate decisions from the European Central Bank and the Bank of England on Thursday and investors are also awaiting news of Chinese inflation, due out on Friday, to see if recent moves by the country's central authorities to apply the economic brakes have been successful.