Easing of China liquidity fears lifts bourse
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¢ at $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."
Frequently Asked Questions about this Article…
The ASX climbed about 1.6% for a second day as investors grew more confident after soothing comments from Beijing about China's financial system and a positive lead from Wall Street. The S&P/ASX 200 finished up 79.6 points (1.68%) at 4,811.3, and the All Ordinaries rose 77 points (1.64%) to 4,784.8.
Moves by China’s central bank to improve liquidity allayed fears of a credit crunch, which helped calm global markets and supported renewed investor interest in Australian equities, contributing to the market rally.
The US Commerce Department downgraded its first-quarter growth estimate from 2.4% to 1.8%, a development markets interpreted as increasing the likelihood the Federal Reserve would continue accommodative policies and bond-buying. That helped push bond futures firmer and supported equities.
Major banks were among the strongest performers: ANZ rose 67¢ to $28.51, 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 (up 5.5¢ to $1.345), Myer (up 12¢ to $2.38) and Telstra (up 13¢ to $4.78).
The big miners lost ground because key commodity prices dropped. As a result, BHP Billiton fell 15¢ to $31.47 and Rio Tinto dropped 11¢ to $51.79 despite the broader market rally.
Bond futures were firmer as dealers found some comfort in disappointing US growth numbers and ongoing central bank commentary aimed at soothing markets. For everyday investors, that indicates lower bond yields and continued central bank support were factors underpinning risk assets.
Yes. Dealers were squaring positions ahead of the Reserve Bank of Australia’s July board meeting and the release of US payrolls data. Both events are market-sensitive and could influence interest-rate expectations, bond markets and equity sentiment.
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 during this trading session, with liquidity and global macro factors being more influential.
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