Market to bust through 5,000

The Australian market is looking for solid gains this morning on higher metals prices and a solid run on Wall Street

After months of turmoil, the domestic market this morning is within a whisker of breaching the 5,000 barrier as it retraces its climb from earlier this year.

A solid performance on Wall Street, after a second day of testimony from Federal Reserve chairman Ben Bernanke and some better jobless figures, saw US stocks advance a further 0.5% into record territory, which should comfortably deliver the Australian market back above the barrier (see my article The sharemarket rally isn't over).

Bernanke hammered home his point that easy money and bond purchases would continue until the economy was healthy enough to cope with a withdrawal, with many now questioning why he raised the prospect in the first place on May 22.

Modest overall advances on the Australian market yesterday masked some significant moves from individual sectors and companies.

Resource heavyweights BHP and Rio Tinto have been in demand all week after releasing better than expected production reports, with record output in most divisions and recoveries in troubled areas.

Despite warnings of imminent falls in iron ore prices, the main steel making ingredient has continued to advance, breaking through $US130 a tonne this week and lifting another $1.50 overnight.

The big miners have been a drag on the market for the past two years, with the materials sector treading water as financials have dominated.

In the past 10 days, however, BHP has risen 10% from its $31 lows, helping propel the broader market more than 300 points since late June when it dipped below 4,700. Rio Tinto has also performed strongly, adding more than 10% since late June when it fell below $51.