Investors take cue from Wall Street gains

SHARES rose to a two-week high yesterday as markets across Asia jumped after positive US economic data sparked a rally on Wall Street.

SHARES rose to a two-week high yesterday as markets across Asia jumped after positive US economic data sparked a rally on Wall Street.

The All Ordinaries Index added 39.1 points, or 0.9 per cent, to 4375.6. The S&P/ASX 200 index rose 39.6 points, or 0.9 per cent, to 4287.2.

That was its highest since February 29 but left the index still stuck below 4300, a level that has largely capped trade since August.

"This is in sharp contrast to other global indices, which recently broke above some key levels," Stan Shamu, a strategist at IG Markets, said. "Such underperformance highlights the lack of confidence Australian investors have in the domestic economy."

The Dow Jones Industrial Average is up 7.9 per cent this year, the Nikkei has risen nearly 19 per cent, but Australian shares are up just 5.7 per cent.

Data released yesterday showed a sharp fall in consumer confidence as households fretted about the outlook for employment and family finances. Meanwhile, dwelling commencements, which show residential building levels, fell 6.9 per cent in the fourth quarter, the third straight decline.

"Builders, building material suppliers and other residential construction-dependent businesses will experience weak conditions for at least the next six months," Craig James, an economist at Commonwealth Securities, said.

Positive comments from the US Federal Reserve chairman, Ben Bernanke, including expectations that the unemployment rate would keep falling, helped Wall Street post its biggest gain of the year and the Dow surge past the 13,000 mark overnight.

The local gains were more moderate but shares still pushed higher in line with offshore markets, the Shaw Stockbroking dealer Jamie Spiteri said. "You've got an equity market that's gaining a little bit more confidence but coming off a fairly subdued base in recent times."

IT stocks were the biggest gainers, jumping 4.4 per cent, led by a 5.5 per cent rise in Computershare. The materials sector added 1.1 per cent, financials 1 per cent and energy 0.6 per cent. Gold was the only sub-index to buck the trend, falling 1.2 per cent following an overnight slump in prices.

Market heavyweight BHP Billiton rose 46? to $35.61, while rival Rio Tinto jumped 95?, or 1.5 per cent, to $65.30.

Woodside Petroleum lost 31? to $35.59 but Oil Search surged 15?, or 2.15 per cent, to $7.14 and Santos added 17?, or 1.18 per cent, to $14.57.

Commonwealth Bank led the big four banks higher, closing up 43?, or 0.9 per cent, at $48.80. ANZ rose 0.9 per cent to $22.30, a 10-month high.

QBE Insurance climbed 41?, or 3.3 per cent, to $12.87, and Insurance Australia Group rose 7?, or 2.1 per cent, to $3.39.

"QBE's a stock that's been hit very hard - the worst performing top 20 stock in our market in recent years," Mr Spiteri said.

Shares in Macquarie Group advanced 56? to $27.23.

Making news, Fortescue Metals will raise $US1 billion ($949 million) through a bond issue to fund its planned expansion. The shares were up 6? at $5.83.

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