Index rises, but not enough for traders
THE sharemarket finished 1 per cent higher yesterday, leaving traders disappointed it did not rise further after European and US markets burst to life on Friday following the euro summit.
THE sharemarket finished 1 per cent higher yesterday, leaving traders disappointed it did not rise further after European and US markets burst to life on Friday following the euro summit.Futures markets had tipped the benchmark index would open 38 points higher the equivalent of about 1 per cent after Europe's leaders agreed to provide billions of euros in financial aid to the troubled banks in Italy and Spain, and kick-start regional growth with a ?120 billion ($148 billion) "growth pact".But after rising nearly 1.4 per cent before noon, the market lost steam as investors turned their attention to the larger problems facing Europe.The S&P/ASX 200 Index finished up 38.4 points, or 0.9 per cent, at 4133, while the dollar closed at US102.25?, up from US101.78? at Friday's close.Brokers said the weekend's events in Europe encouraged investors to return to the market, and as it was also the start of the new financial year there was interest in second and third-tier stocks, such as BlueScope Steel (up 11.7 per cent), Fairfax Media (up 5.8 per cent) and Challenger (up 5.5 per cent)."We entered the new financial year today, so those that were restricted from opening new financial positions [last week] were . . . a little freer to invest in the broader market," said Shaw Stockbroking's Jamie Spiteri.But fund managers said that, while the European summit had been a good thing for the market, bigger problems would continue to dog shareholders."[Of] the commentators that I prefer to listen to, the consensus seems to be that there needs to be some form of eurobond before [we] can finally put a line under the sovereign debt crisis," said Don Williams of Platypus Asset Management."The issue for Europe is that, even if they resolve the current crisis today, they still end up with a massive debt load that is going to continue to grow for years, and that's going to constrain growth."Resource and energy stocks were among the favourites yesterday, as investors' appetite for risk improved slightly.BHP Billiton rose 27?, at $31.72 while Rio Tinto firmed 1? to $56.51.The financial sector rose 1.2 per cent, helped by Westpac, up 35? at $21.46, and ANZ, up 38? at $22.35.