Good news from China halts roller-coaster ride
EXTREME volatility rocked the Australian sharemarket, but positive Chinese economic data reversed a horror start triggered by panic selling across the globe.
EXTREME volatility rocked the Australian sharemarket, but positive Chinese economic data reversed a horror start triggered by panic selling across the globe.The domestic market was down more than 5 per cent in early trade after Wall Street plunged roughly the same amount on Monday, the first trading session in the US since Standard and Poor's downgraded its credit rating.A wave of panic selling hit European markets, led by Greece's main bourse, which plummeted 6 per cent.But relief came midway through yesterday's session when China's consumer price index data showed non-food inflation was lower than last month, implying that inflation may have peaked. The S&P/ASX200 index finished up 48.7 points, or 1.22 per cent, at 4034.8 points while the broader All Ordinaries index put on 40 points, or 0.99 per cent, to 4096.7.Analysts declared Australia a bear market yesterday after the S&P/ASX 200 fell below 4000 points for the first time in two years, describing the sell-off as a crisis in investor confidence.While the morning's early losses were partly attributed to margin calls, IG Markets's strategist, Ben Potter, described the turnaround as "a classic short covering relief rally". Traders were aggressively looking to take profits on their short positions, Mr Potter said.In early trade, falls outnumbered rises more than 13 to one, but by close of market, 841 stocks were down, 458 were up and 302 were steady.The futures market is pointing to a positive start to today's trade.Gold stocks shone after the price of the precious metal hit a new record high of well over $1700 per ounce. The spot price of gold closed in Sydney at $US1747.30 per ounce, up $37.12 from Monday's local close.The Philippines-focused goldminer OceanaGold Corp was the best performing stock in the S&P/ASX200 index, finishing up 19?, or 9.95 per cent, at $2.10.Sharemarket heavyweight BHP Billiton was up 45?, or 1.23 per cent, at $37.05 while Rio Tinto advanced $1.11, or 1.62 per cent, to $69.74.National Australia Bank said it was on track to deliver an annual profit higher than $5.5 billion after a strong June quarter earnings result emphasised the return of margin growth for the bank. NAB finished up 60?, or 2.87 per cent, at $21.50.