Sharemarket recovering as dollar settles
US Federal Reserve authorities did their best to remind short-sellers that they may have misunderstood the Fed's monetary policy announcement last week - the cause of so much consternation in global bond and currency markets.
For the week, the S&P/ASX 200 Index climbed 63.8 points, or 1.3 per cent, to 4802.6, while the broader All Ordinaries Index rose 51.6 points, or 1.1 per cent, to 4775.4 points.
Australia's dollar gyrated wildly last week within a 3¢ range, but this week it traded in a much tighter range, of just a third of a cent, to close around US92.6¢. Strategists said the dollar could finally be trading near its "equilibrium value" for the first time since late 2011.
They also said the dollar's so-called "fair value" might be US90¢ throughout 2014, thanks to recent major adjustments on the back of weaker Chinese growth, lower commodity prices and movements in global risk assets and yields.
That's a big change from previous years. A review of news reports from 2011 shows one quoting a foreign currency expert warning that the Australian dollar could hit $US1.70 in 2014.
Meanwhile, figures from the Bureau of Statistics showed it became harder for Australia's unemployed to find work in the last year, with job vacancies falling by 20 per cent. There are now five unemployed people for every vacant job in Australia, with job vacancies falling in the past year and the unemployed increasing by 50,000.
Australia's most authoritative job vacancy survey, compiled by the Bureau of Statistics, shows just 138,700 vacant roles in May, down from 177,800 a year earlier.
For the week, Tabcorp lost 14¢, or 4.4 per cent, to $3.05 after Victoria's two big gaming companies won court action against the state government over levies of more than $42 million imposed on them.
Toll Holdings rose 11¢, or 2.1 per cent, to $5.32 after it reaffirmed its earnings forecast despite weaker earnings from its international freight business.
Metcash rose 8¢, or 2.3 per cent, to $3.52. The supermarket group lifted underlying full-year profit by 6.9 per cent to $281 million. But it has lost market share in its core grocery business as it beds down restructuring and new acquisitions.
Rio Tinto shed 29¢, or 0.5 per cent, to $52.37 after the company decided to retain its diamond businesses following a review that considered options including divestment.
Suncorp slipped 20¢, or 1.6 per cent, to $11.92 after it confirmed it was paying back $23 million to customers who did not receive promoted discounts on their insurance policies.
Blackwood rose 0.4¢, or 8.7 per cent, to 5¢ after former billionaire Nathan Tinkler paid a $12 million bill to the coal explorer that allowed him to avoid moves to freeze his assets.
Frequently Asked Questions about this Article…
The sharemarket recovered all of last week’s losses this week: the S&P/ASX 200 climbed 63.8 points (1.3%) to 4,802.6 and the All Ordinaries rose 51.6 points (1.1%) to 4,775.4. Strategists say calmer currency moves and comments from US Federal Reserve authorities — which helped ease confusion around last week’s Fed announcement — contributed to the rebound.
After a volatile week, the Australian dollar traded in a much tighter range and closed around US92.6¢. Markets noted the currency was less volatile this week, prompting strategists to say it may be trading near its equilibrium value for the first time since late 2011.
Strategists suggested the Australian dollar’s so‑called 'fair value' might be about US90¢ through 2014. That view reflects recent adjustments tied to weaker Chinese growth, lower commodity prices and movements in global risk assets and yields.
The Bureau of Statistics’ job vacancy survey shows it has become harder to find work: vacancies fell about 20% over the year to 138,700 in May (down from 177,800), the unemployed increased by roughly 50,000, and there are now about five unemployed people for every vacant job.
Tabcorp fell 14¢, or 4.4%, to $3.05 after a court action involving Victoria’s two major gaming companies and the state government over levies of more than $42 million was reported in the news coverage referenced by the article.
Toll Holdings rose 11¢, or 2.1%, to $5.32 after the company reaffirmed its earnings forecast despite reporting weaker earnings from its international freight business.
• Metcash rose 8¢ (2.3%) to $3.52 after lifting underlying full‑year profit by 6.9% to $281 million, though it has lost some grocery market share while bedding down restructuring and acquisitions. • Rio Tinto shed 29¢ (0.5%) to $52.37 after deciding to retain its diamond businesses following a strategic review. • Suncorp slipped 20¢ (1.6%) to $11.92 after confirming it will pay back $23 million to customers who missed promoted discounts. • Blackwood jumped 0.4¢ (8.7%) to 5¢ after former billionaire Nathan Tinkler paid a $12 million bill that averted moves to freeze his assets.
US Federal Reserve authorities sought to clarify the central bank’s recent monetary policy announcement — a move the article says was aimed at reminding short‑sellers they may have misread the message. That clarification helped calm consternation in global bond and currency markets and supported the sharemarket recovery.
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