Last-hour surge caps week of solid gains

INVESTORS sprinted home in the last hour of trading yesterday to push an already positive week on the market into higher territory.

By InvestSMART · 3 Dec 2011

By InvestSMART ·
3 Dec 2011

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INVESTORS sprinted home in the last hour of trading yesterday to push an already positive week on the market into higher territory.

After trading only about 0.3 of a percentage point above zero, the benchmark S&P/ASX 200 Index closed up 59.4 points, or 1.4 per cent.

It was the fifth consecutive day of rises but for much of yesterday trading was flat, with analysts saying investors appeared to be consolidating after several good confidence-restoring days.

The ASX has outperformed overseas markets, after mixed overnight leads with markets in Europe and the US mostly declining or flat after the previous day's jump.

The ASX 200 Index of the biggest 200 companies gained 7.6 per cent for the week.

The late surge reflected investors that were "underweight" in equities returning to the asset class and short traders who bet on stocks to fall covering their positions, said CMC Markets chief market strategist Michael McCarthy.

"In the absence of any other factors, which is essentially what we've got today, the natural bias is a positive one, but so many people are positioned for further market falls," he said.

The "small ordinaries", a sub-index of stocks outside the top 300, had outperformed the bigger caps, rising by 1.7 per cent, which Mr McCarthy said was a positive sign that confidence was better this week. "It does suggest people are prepared to take on more risk after the events of this week," he said.

"Obviously the smaller stocks are less liquid and harder to get out of in a problem situation, but in a good market they'll tend to outperform."

Defensive sectors such as healthcare and consumer staples kept the market ahead for much of the day and ended up 1.83 per cent and 1.93 per cent respectively.

The banks led the surge at day's end, defying a ratings downgrade by Standard & Poor's. The best performer was Westpac, up 44?, or 2.1 per cent, to $21.57.

National turnover was 2.2 billion shares worth $5.6 billion, with 577 shares up, 423 down and 366 unchanged.

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Frequently Asked Questions about this Article…

What triggered the ASX last-hour surge that pushed markets higher?

The article says the late surge resulted from investors who had been "underweight" in equities returning to the market and short traders covering their positions, according to CMC Markets chief strategist Michael McCarthy. The S&P/ASX 200 closed up 59.4 points, or 1.4%, after that final-hour momentum.

How did the ASX 200 perform over the week and what does that weekly gain mean?

The S&P/ASX 200 gained 7.6% for the week and logged its fifth consecutive day of rises. The article frames that weekly gain as a period of confidence-restoring moves after recent market events.

Which sectors led the market during the day and how did they perform?

Defensive sectors led much of the day: healthcare rose about 1.83% and consumer staples about 1.93%. Banks then led the late-day surge, helping lift the overall market into positive territory.

How did bank shares react to the Standard & Poor’s ratings downgrade?

Despite a ratings downgrade from Standard & Poor’s, bank stocks led the day's late rally. Westpac was the standout performer mentioned in the article, rising about 2.1% to $21.57 by the close.

What happened with smaller stocks (the 'small ordinaries') and why does that matter?

The small ordinaries sub-index, which tracks stocks outside the top 300, rose 1.7% and outperformed larger-cap stocks. The article notes that this outperformance suggests investors were more willing to take on risk during the week, although smaller stocks are typically less liquid and harder to exit in a downturn.

What was the trading volume and market breadth on the day of the surge?

National turnover was 2.2 billion shares worth about $5.6 billion. Market breadth showed 577 stocks up, 423 down and 366 unchanged, according to the article.

What did market commentators say about investor positioning and market sentiment?

Analysts described much of the day as consolidation following several confidence-restoring days. Michael McCarthy said many investors had been positioned for further market falls (underweight equities), and the late return to equities plus short-covering created a positive bias in the absence of other major factors.

Does the article suggest everyday investors should change their investment strategy after the surge?

The article does not offer direct investment advice or recommend strategy changes. It reports observable market drivers—short covering, underweight investors returning, stronger performance in smaller stocks and defensive sectors—and highlights that market moves can reflect temporary positioning rather than long-term trends. Everyday investors should note those factors when assessing market conditions.