Market's one-month rise a two-year high

THE Australian sharemarket has ended another volatile month on global sharemarkets by posting the biggest one-month gain in two years.

By InvestSMART · 1 Nov 2011

By InvestSMART ·
1 Nov 2011

Comments

THE Australian sharemarket has ended another volatile month on global sharemarkets by posting the biggest one-month gain in two years.

That was even after Monday's 1.2 per cent slump, and analysts say the volatility is likely to continue.

The 7.1 per cent gain in the All Ordinaries in October was the largest rally since July 2009, when the market rose 7.6 per cent as it recovered after the worst of the financial crisis.

October's gain, in the wake of the euro zone's long-awaited debt deal, followed six straight months of falls for a total loss of 18.7 per cent.

The ASX was headed for its best month since 1988 until falls on the final day of the month left the benchmark S&P/ASX200 index down 55.2 points, or 1.27 per cent, at 4298.1.

October's positive performance continued the volatility of recent months, with Germany, France and the US all up between 4 and 6 per cent last week, Commsec market analyst Steve Daghlian said.

Now that the concrete measures had been announced by the European Union, investors were realising many problems still existed in global markets, which was why the market was down, Mr Daghlian said.

"I think the volatility could very well continue until things settle down a little bit offshore . . . there's just a little bit of pulling back, profit taking," he said.

"One meeting from European leaders does not mean everything is going to sort itself out."

Shares in Qantas were up 6.75?, or 4.4 per cent, to $1.6125, the biggest gainer among the top 100 stocks after Fair Work Australia ordered a halt to the industrial action and the airline's planes started flying again. Rival airline Virgin Blue rose 1.5?, or 4.2 per cent, to 37.5?.

Travel agent Flight Centre went down 9? to $19.88.

The big four banks were all weaker ahead of full-year results from ANZ and Westpac this week.

ANZ, the worst of the banks on Monday, dropped 40?, or 1.8 per cent, to $21.68, National Australia Bank was down 29? at $25.70, Commonwealth Bank lost 69? to $49.27 and Westpac shed 36? to $22.32.

Construction giant Leighton Holdings lost 56?, or 2.5 per cent, to $21.84 after it said a credit rating downgrade by Moody's would have no impact on its existing credit facilities.

Rare earths supplier Lynas Corporation slumped 9.5?, or 7.3 per cent, to $1.205, the worst performance among the top 100, after it said slight delays meant that a planned Malaysian plant would now come on line during the first half of 2012.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

Why did the Australian sharemarket post its biggest one-month gain in two years in October?

October saw the All Ordinaries rise 7.1% — its largest monthly rally since July 2009 — largely in response to relief around the euro zone's long‑awaited debt deal and strong gains offshore (Germany, France and the US were up between about 4–6% last week). The jump followed six straight months of falls, so some of the move reflected a rebound after earlier losses.

What does a 7.1% gain in the All Ordinaries mean for everyday investors?

A 7.1% one‑month gain signals a meaningful short‑term rebound (the biggest since mid‑2009), but it doesn't erase the prior six‑month decline. The article notes the market remains volatile, so everyday investors should view the rally as a recovery phase rather than a guarantee of steadier markets ahead.

Is market volatility likely to continue after October’s rally?

Yes — analysts quoted in the article said volatility could very well continue. Even after the EU announced concrete measures, investors realised many global problems remained. Expectations of profit‑taking, offshore uncertainty and further headlines mean swings are likely until conditions stabilise overseas.

Which ASX stocks moved the most in October and what caused those moves?

Qantas was the biggest gainer among the top 100 after Fair Work Australia ordered a halt to industrial action and the airline’s planes resumed flying (Qantas shares were reported at $1.6125). Rival Virgin Blue also rose, while travel agent Flight Centre fell to $19.88. Among large caps, the big four banks were weaker ahead of full‑year results, Leighton Holdings fell to $21.84 after addressing a Moody’s downgrade, and rare‑earths supplier Lynas plunged to $1.205 when it announced a delay to its planned Malaysian plant.

How did the euro zone debt deal affect Australian markets?

The euro zone debt deal helped spark October’s rally, providing short‑term relief across global markets. However, the article highlights that investors still saw unresolved issues offshore, which contributed to ongoing volatility rather than a full resolution of market concerns.

Why were the big four banks weaker despite the overall market gains?

The big four banks were trading lower as investors became cautious ahead of full‑year results from ANZ and Westpac that week. The article notes ANZ was the weakest on the day referenced (down to $21.68), with NAB, Commonwealth Bank and Westpac also easing as markets awaited earnings news.

What happened to Leighton Holdings and Lynas Corporation, and how did those announcements affect their shares?

Leighton Holdings fell to $21.84 after addressing a Moody’s credit rating downgrade and saying it would have no impact on its existing credit facilities. Lynas Corporation was the worst performer among the top 100, sliding to $1.205 after announcing slight delays that push its planned Malaysian plant to coming online in the first half of 2012.

What practical takeaways should everyday investors get from the month’s market swings?

The key takeaways from the article are: markets can rebound sharply but remain volatile; global events (like the euro‑zone deal) can trigger rallies but may not resolve underlying risks; company‑specific news (industrial action, earnings, credit ratings, project delays) drives individual stock moves; and investors should be prepared for profit‑taking and further swings until offshore conditions settle.