THE sharemarket added 0.7 per cent yesterday as hopes for a new debt deal in Europe and forecast-beating economic growth data for the September quarter boosted investor appetite.
Europe's new debt plan, due to be presented at this week's leaders' summit, would reportedly almost double the size of the region's fund for indebted countries and include increased backing from the International Monetary Fund.
The news helped markets shrug off a warning from ratings agency Standard & Poor's that 15 euro-zone countries including Germany could face a credit ratings downgrade if they failed to reach an agreement.
But City Index chief market analyst Peter Esho noted that markets were still struggling to break above the "psychologically key" 4300-level as investors remained cautious in the uncertain macro climate.
The market received a further boost from data showing the Australian economy grew by a solid 1 per cent in the September quarter. Growth in the quarter to June was also revised up, to 1.4 per cent.
"The domestic economy seems to be cracking along at quite a strong pace," said Commonwealth Bank economist James McIntyre.
The benchmark S&P/ASX 200 Index closed up 30.5 points, or 0.7 per cent, at 4292.5.
Telecoms and healthcare shares stood out, with the sectors rising about 1 per cent. Telstra finished up 4?, or 1.3 per cent, at $3.25.
Mr Esho said the company remained an attractive investment because it was maintaining its dividend despite difficult market conditions.
"As rates come down and Telstra maintains that dividend commitment, the spread between the yields is strengthening," he said.
Telecom New Zealand added 3.5?, or 2.3 per cent, to $1.55.
Among health stocks, CSL added 48?, or 1.5 per cent, to $32.44 and Ramsay Health Care gained 46?, or 2.5 per cent, to $19.26. Meanwhile, the market is still waiting to see if the big banks will pass on the the Reserve Bank's reduction in the cash rate.
ANZ led the gains among the big banks, rising 25?, or 1.2 per cent, to $21.24.
The others gained between 0.5 per cent and 1 per cent.
Shares in Bank of Queensland rose 19?, or 2.4 per cent, to $8.13, even after S&P downgraded its issuer credit rating.
Turnover was 1.86 billion shares worth $3.79 billion, with about 13 shares rising for every five that fell.
The price of gold in Sydney closed at $US1728.63 an ounce, up $US14.46.
Frequently Asked Questions about this Article…
Why did the sharemarket rise today and what role did Europe’s new debt plan play?
The market rose about 0.7% as investor optimism was lifted by reports that Europe’s leaders will present a new debt plan that would nearly double the region’s fund for indebted countries and include more IMF backing. That reduced some concerns about sovereign stress and helped markets focus on positive local data.
How did Australian economic growth figures affect the ASX 200 performance?
Stronger-than-expected growth for the September quarter—GDP up 1.0%—and an upward revision to 1.4% for the June quarter boosted investor confidence. That domestic growth news contributed to the S&P/ASX 200 closing up 30.5 points (0.7%) at 4,292.5.
What is the significance of the ASX 200 struggling around the 4,300 level?
Analysts say the 4,300 mark is a psychologically key level. Although the market rallied, it struggled to decisively break above that level, indicating investors remain cautious in the uncertain macro environment despite positive headlines.
Why is Telstra being seen as an attractive investment right now?
Telstra’s shares rose (about 1.3% to $3.25) as analysts highlighted its commitment to maintaining dividends even in tougher conditions. With interest rates coming down, the yield spread looks more attractive, supporting investor interest in the stock.
How did telecom and healthcare stocks perform and which companies stood out?
Telecom and healthcare were among the best-performing sectors, each up roughly 1%. Telecom New Zealand gained to $1.55, while health stocks CSL rose about 1.5% to $32.44 and Ramsay Health Care climbed around 2.5% to $19.26.
Will the big banks pass on the Reserve Bank’s recent cash rate cut, and how did banks trade today?
The market is still waiting to see if big banks will pass on the RBA’s cash rate reduction to customers. In trading, ANZ led the big-bank gains, up about 1.2% to $21.24, while other major banks rose between roughly 0.5% and 1%.
What happened with Bank of Queensland after the S&P downgrade and should investors be concerned?
Shares in Bank of Queensland rose about 2.4% to $8.13 despite S&P downgrading its issuer credit rating. The stock’s intraday rise suggests investors focused more on broader market momentum and sector dynamics than the rating action on that day.
What was market turnover today and how did commodities like gold perform?
Turnover was about 1.86 billion shares worth $3.79 billion, with roughly 13 shares rising for every five that fell. In commodities, the Sydney price of gold closed at US$1,728.63 an ounce, up US$14.46.
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