THE market has risen to its highest close in more than four months, led by miners, as investors cheered another round of US Federal Reserve monetary stimulus.
For the week, the S&P/ASX 200 Index rallied 64.2 points, up 1.5 per cent, to finish at 4390. On the day, the S&P/ASX 200 added 50.6 points, or 1.2 per cent.
Overnight, the US Federal Reserve unveiled a third round of quantitative easing to the tune of $US40 billion a month to revive the ailing US economy. The move, though widely anticipated, spurred investors to snap up assets deemed relatively risky, such as commodities and their producers.
The dollar powered to as high as US105.91?, putting it on course for a weekly gain of about 2.4 per cent, or its best advance since late January.
IG Markets analyst Cameron Peacock described the gains by miners as "absolutely textbook".
"The overall mining picture is being buoyed by quantitative easing. That's going to last through to the end of the year and into next year until the US economy shows signs of recovery," Mr Peacock said.
But Fortescue Metals missed out on the uplift. It entered a trading halt as the company confirmed to the ASX that it was seeking a restructuring of its $9 billion debt. The stock sank 14 per cent on Thursday.
Another 2 per cent fall in Chinese iron ore prices yesterday failed to dim buying appetite for the miners.
"There's obviously a heavy composition of mining stocks [in the ASX 200], so the fact that one stock is not trading is not going to have a massive impact on the overall performance of the sector for the day," said Mr Peacock.
Riskier assets drove up the sharemarket, including mining stocks, which lifted by about 3 per cent and energy stocks by nearly 2 per cent.
BHP added 53?, or 1.6 per cent, to finish at $33.31 and Rio Tinto rose $1.53, or 1.5 per cent, to $56.58.
Goldminers climbed strongly, with Australia's largest producer, Newcrest Mining, gaining $1.93, or 7.3 per cent, to $28.36, while St Barbara gained nearly 14 per cent, or 24?, to $1.985, and Kingsgate improved by 48?, or 10 per cent, to $5.33.
Gold was trading at six-month highs, around $US1775 an ounce. It closed in Sydney at $US1774.01 an ounce, up $US43.37 from $US1730.64 on Thursday.
Financials also performed strongly. Among the banks,
Westpac added 31?, or 1.3 per cent, to $24.11, NAB rose 13?, or 0.5 per cent, to $25.41, CBA jumped 26?, or 0.5 per cent, to $55.28 and ANZ finished up 9?, or 0.4 per cent, at $24.23.
"Everything has been exactly what you'd expect today. If you'd come in this morning and said, 'What sectors do you expect to be up and down?' . . . it has all played out according to plan," said Mr Peacock.
National turnover was 1.88 billion securities worth $4.67 billion, with 661 stocks up, 299 down and 375 unchanged.
Frequently Asked Questions about this Article…
Why did the ASX (S&P/ASX 200) reach its highest close in more than four months?
The S&P/ASX 200 rallied as investors moved into riskier assets after the US Federal Reserve unveiled a third round of quantitative easing (about US$40 billion a month). Miners led the gains and the index finished the week up 64.2 points (1.5%) and closed at 4390, adding 50.6 points (1.2%) on the day.
How did the US Federal Reserve's quantitative easing impact Australian mining stocks?
The Fed's third round of quantitative easing spurred demand for assets perceived as relatively risky, including commodities and mining producers. IG Markets analyst Cameron Peacock said the miners' gains were “absolutely textbook,” noting the overall mining picture was being buoyed by QE and likely to persist until the US economy shows recovery.
Which major miners outperformed during the rally and what were their moves?
The mining sector overall lifted by about 3%. Major stocks in the rally included BHP, which rose 1.6% to finish at $33.31, and Rio Tinto, which gained $1.53 (1.5%) to $56.58, according to the article.
What happened to Fortescue Metals and how did the market react?
Fortescue Metals entered a trading halt after confirming it was seeking a restructuring of its US$9 billion debt. The company's stock sank 14% on Thursday. Analysts noted, however, that because mining stocks are heavily represented in the ASX 200, one non‑trading stock wouldn't massively affect the sector's overall performance for the day.
How did gold and Australian gold miners perform during the market rise?
Goldminers climbed strongly. Newcrest Mining gained $1.93 (7.3%) to $28.36, Kingsgate improved about 10% to $5.33, and St Barbara saw a sharp rise (reported as nearly double‑digit gains) to around $1.985. Gold itself traded near six‑month highs at roughly US$1,775 an ounce, closing in Sydney at US$1,774.01 — up US$43.37 from the prior quote.
Did financial and bank stocks participate in the rally?
Yes. Financials performed strongly alongside the miners. Reported bank moves included Westpac up 1.3% to $24.11, NAB rising 0.5% to $25.41, CBA up 0.5% to $55.28, and ANZ finishing 0.4% higher at $24.23.
Were any commodity prices weakening despite the miners' rally?
Yes — Chinese iron ore prices fell about 2% the day before, but that decline did not dampen investor appetite for mining stocks during the rally, according to the article.
What did market breadth and turnover look like during this ASX rally?
The rally showed broad participation: national turnover was 1.88 billion securities worth $4.67 billion, with 661 stocks up, 299 down and 375 unchanged — indicating widespread buying across the market on the day described.
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