DESPITE last week's string
of high-profile profit downgrades, the sharemarket yesterday had its best day in months, as investors looked forward to
a rate cut today from the Reserve Bank.
The market made its highest monthly close since August 2, helped by local banking and resource stocks, with traders shrugging off news the US economy had grown less than expected in the March quarter.
For April, the S&P/ASX 200 Index gained 1.4 per cent its fourth consecutive monthly gain. The benchmark index has risen 8.4 per cent since the start of the year. Yesterday it put on 34.5 points, or 0.8 per cent,
Societe Generale strategist Sebastien Galy said the market enjoyed a solid lift because Friday's weak US GDP data had increased the chances of more quantitative easing by the US Federal Reserve, thus raising global risk appetite.
But Commonwealth Bank chief currency strategist Joe Capurso said further quantitative easing looked unlikely.
"We expect the US economic recovery to continue but remain patchy and vulnerable to external shocks," Mr Capurso said.
"While some US data such as retail sales and home building are gathering momentum, real household incomes and government spending remain very weak . . . we do not think the Fed will be in a hurry to implement QE3."
Meanwhile, on the eve of the RBA's highly anticipated rate cut, the Housing Industry Association weighed into the debate, calling for the central bank to slash the cash rate by 50 basis points in one hit.
This followed a survey that showed new home sales had fallen to their lowest in more than a decade.
Industrial services company Spotless was up 10? at $2.56 after it agreed
to a full takeover by private equity firm Pacific Equity Partners, at $2.71 a share.
Gold, copper and silver miner Kagara appointed voluntary administrators. The miner's shares have
been in a trading halt at 12? for more than a week after plunging more than 68 per cent in the past three months.
Shares in NAB climbed 8? to $25.23 after it said it would restructure its loss-making UK operation, which contributed to a 15.6 per cent fall in the group's first-half profit.
The other major banks all rose, Commonwealth up 38? at $51.97, ANZ up 25? at $23.91 and Westpac up 14? at $22.73.
BHP Billiton rose 66? to $35.55 and Rio Tinto was 92? higher at $66.35.
The dollar climbed nearly a full US cent.