Chinese rescue mission lifts resources
THE sharemarket snapped a three-day losing streak yesterday after the Chinese central bank's announcement of a cash injection into money markets helped push resource stocks up.
THE sharemarket snapped a three-day losing streak yesterday after the Chinese central bank's announcement of a cash injection into money markets helped push resource stocks up.The market had been tracking about 0.6 per cent lower during the day until news came out around midday that the People's Bank of China would pump 365 billion yuan ($A56 billion) into money markets to maintain banks' liquidity.The benchmark S&P/ASX 200 rose 22.6 points, or 0.5 per cent, to 4384.2.Goldminers led the charge, adding 1.3 per cent, while materials and health jumped 1.1 per cent. CSL was the star of the healthcare sector, hitting a record high of $45.98.Financial stocks finished 0.5 per cent higher and energy rose 0.3 per cent. Consumer discretionary and consumer staples bucked the trend, falling 0.3 and 0.2 per cent respectively.China's capital injection helped investors shrug off news of a fresh breakout of European debt fears, after eurozone creditors made it known that Spain's banks would be burdened with higher debts if a planned ?100 billion bailout went ahead.Spanish 10-year bond yields pushed back above 6 per cent overnight, wiping 2.7 per cent in value from Europe's equity market.St George economist Janu Chan said Spanish Prime Minister Mariano Rajoy faced growing pressure to ask for a bailout from European authorities, particularly as Spanish anti-austerity protests intensified."Concerns about the situation in Spain have driven 10-year bond yields above 6 per cent, rising 32 basis points, further placing pressure on Spain to ask for a bailout," Ms Chan said."There's a lot of anger from the public about the austerity measures that have been put in place."After the news from China, Australia's largest company, BHP Billiton, rose 21?, or 0.64 per cent, to $33.02. It represents more than a fifth of resource stocks by market capitalisation and helped drag the market up.Fellow resource stocks also improved, with Rio Tinto up 70? at $53.59, and Fortescue Metals 1? higher at $3.52.Echo Entertainment rose 4? to $3.79 after the group denied it was in turmoil when chief executive Larry Mullin quit, amid concerns about the casino operator's balance sheet.Metcash slipped 8? to $3.57, after the grocery wholesaler said it expected to name a new chief executive in February, with Andrew Reitzer confirming he will resign at the end of June next year but will remain as a consultant for three years.Woolworths dropped 27? to $29.01 after it announced the sale of its Dick Smith Electronics chain to a private equity firm for $20 million.