Industrials lead to a solid close
THE sharemarket closed higher yesterday on strong turnover, led by investments in industrial companies and after a rally on Wall Street that followed a plunge the night before.
THE sharemarket closed higher yesterday on strong turnover, led by investments in industrial companies and after a rally on Wall Street that followed a plunge the night before.It has been an extraordinary week for Europe. Italian Prime Minister Silvio Berlusconi resigned after 16 years in office as Italian bond yields showed the market believed Italy was close to becoming incapable of servicing its debt.It was also a week in which Greece's parliament appointed a new prime minister a former vice-president of the European Central Bank, Lucas Papademos. The yield on the Hellenicrepublic's 10-year bonds is now 25.4 per cent, compared with 1.7 per cent for Germany and 2 per cent for the US.Wall Street finished its Thursday session with a gain of 0.8 per cent on better than expected job numbers in the US and good Chinese trade figures. But compared with what had happened earlier in the week, the usual economic releases and corporate news looked almost irrelevant.Australia's S&P/ASX 200 Index closed 1.2 per cent higher on turnover of $5.7 billion, the highest daily figure since October 28.The head of international equities at Wingate Group, Chad Padowitz, said markets would refocus on corporate news when sovereign issues calmed down.But Wilson Asset Management equities analyst Martin Hicks said that in the current market it was hard to find Australian companies with strong earnings growth."It is all about the European headlines. There is extreme volatility and uncertainty,"he said.However, the turmoil in Europe had created the prospect that the Reserve Bank's recent rate cut would be followed by further cuts, which would help stimulate the Australianeconomy and could boost industrial stocks."In the past, the RBA normally doesn't cut once. There is usually a series of cuts," Mr Hicks said.