Chinese liquidity bid drives investment
A positive lead from Wall Street also helped.
The market rose by about 1.6 per cent, following a similar gain on Wednesday.
At the close, the S&P/ASX 200 Index was up 79.6 points, or 1.68 per cent, at 4811.3. The broader All Ordinaries rose 77 points, or 1.64 per cent, to 4784.8.
"Taking a positive cue from Wall Street and the soothing comments out of Beijing overnight, Aussie traders are refreshed and revived as we see a renewed interest for Australian equities," CMC Markets trader Betty Lam said.
A reduction of first-quarter economic growth estimates by the US Commerce Department was taken by Wall Street as a sign the Federal Reserve would keep pumping money into the economy through its bond-buying program.
Fears of a credit crunch in China have also been allayed by moves from the country's central bank to improve liquidity.
The big banks were strong performers, with ANZ up 67¢ at $28.51, while Commonwealth Bank gained $1.87 to $69.16, NAB added 52¢ to $29.75 and Westpac was 57¢ higher at $28.81.
Other standouts included Qantas, which gained 5.5¢ to $1.345, Myer adding 12¢ to $2.38 and Telstra, up 13¢ to $4.78. But the big miners lost ground as key commodity prices dropped.
BHP Billiton fell 15¢ to $31.47 and Rio Tinto dropped 11¢ to $51.79.
IG market analyst Evan Lucas said the return of Kevin Rudd as Prime Minister and the resignation of key government ministers had little effect on the market.
Bond futures prices were firmer as dealers took a small amount of comfort from disappointing US growth numbers. Most of the price action came after the US Commerce Department slashed its estimate for first-quarter growth from 2.4 per cent to 1.8 per cent.
"It certainly helped the bid in bonds, but I think it's more the relentless commentary from central bankers trying to soothe markets," said RBC Capital Markets fixed-income strategist Michael Turner.
Dealers were squaring their positions before the Reserve Bank's July board meeting next week and the release of US payrolls data.
"Really, the focus for the Fed is going to be payrolls - they've been pretty consistent with that for the past several months."
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The ASX rose after a positive lead from Wall Street and calming comments from Beijing. Moves by China's central bank to improve liquidity eased fears of a credit crunch, while weaker US first-quarter growth estimates encouraged expectations the Federal Reserve would keep supporting markets through bond-buying.
The S&P/ASX 200 rose 79.6 points (about 1.68%) to 4,811.3, while the broader All Ordinaries gained 77 points (about 1.64%) to 4,784.8.
Big four banks were strong performers: ANZ rose 67 cents to $28.51, Commonwealth Bank gained $1.87 to $69.16, NAB added 52 cents to $29.75, and Westpac increased 57 cents to $28.81 — making bank stocks a major contributor to the market rally.
Other risers included Qantas (up 5.5 cents to $1.345), Myer (up 12 cents to $2.38) and Telstra (up 13 cents to $4.78), all showing renewed investor interest in those Australian equities.
BHP Billiton fell 15 cents to $31.47 and Rio Tinto dropped 11 cents to $51.79 because key commodity prices fell, which weighed on the big mining stocks even as the rest of the market strengthened.
The US Commerce Department cut its estimate for first-quarter growth from 2.4% to 1.8%, which Wall Street interpreted as a reason the Fed would keep monetary support in place. That helped lift bond futures and gave dealers some comfort that global liquidity would remain available.
According to IG market analyst Evan Lucas, the return of Kevin Rudd as Prime Minister and the resignation of key ministers had little effect on the market, suggesting traders were more focused on economic and central bank signals.
Investors should watch the Reserve Bank of Australia's July board meeting and the upcoming US payrolls data, as dealers were already squaring positions ahead of those releases and payrolls are a key focus for the Federal Reserve.
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