Good news on inflation sparks turnaround
STOCKS rebounded strongly to finish in positive territory after falling heavily in early trade.
STOCKS rebounded strongly to finish in positive territory after falling heavily in early trade.The turnaround was led by the retailers and banks after the release of consumer price index data for the September quarter showed that inflation slowed.IG Markets dealer Chris Weston said the market might hang on to its gains, despite trepidation about the European leaders summit last night.It was news of the cancellation of a key meeting of European finance ministers scheduled for Tuesday night, the eve of the summit, that drained confidence from US and European markets.That reaction carried over into Australian trading, sending the benchmarkS&P/ASX 200 Index down54 points, or 1.3 per cent. The index finished with a gain of 14.6 points, or 0.35 per cent, at 4242.5.National turnover was 1.67 billion shares worth $4.38 billion, with about10 stocks falling for every nine that gained.Mr Weston said the market now fully expected a rate cut."The discretionary stocks are looking like they're seeing a bit of leeway," he said.The big four banks all closed higher after starting the day down. National Australia Bank, which reports its full-year earnings today, rose 28? to $24.95, Westpac put on 30? to $22.30 and Commonwealth gained 39? to close at $49.11 and ANZ firmed 4? to $21.59.Retailers also rose, with Woolworths up 11? at $24.15, David Jones up 12?, or 3.7 per cent, at $3.36 andJB Hi-Fi up 70?, or 4.7 per cent, at $15.74.In the resource sector, goldminer Newcrest jumped $1.15, or 3.5 per cent, to $34.40 after a sharp rise in the gold price overnight. At the close of Australian trading yesterday, the spot gold price was up $US63.67 at $US1719.32 an ounce.Intrepid Mines gained 10.5?, or 10 per cent, to $1.16, Perseus Mining rose 12?, or 3.9 per cent, to $3.23 and Alacer Gold rose 81?, or7.8 per cent, to $11.19.BHP dropped 23? to $36.94 and Rio Tinto was up 11? at $66.74.Making news, Insurance Australia Group said it was on track to deliver on its full-year financial guidance after an encouraging performance in the first quarter. Its shares were up 4? at $3.16.The December share price index futures contract was up six points at 4222, with 36,448 contracts traded.The dollar closed down three-quarters of a US cent against the background of delays in Europe's debt crisis talks and soft local inflation figures. At 5pm, it was trading at $US1.0374, down from $US1.0456 on Tuesday.