Shares swing higher on optimism spurt

THE sharemarket rallied yesterday to a near five-month high after the Reserve Bank said global market sentiment had improved since late December.

By InvestSMART · 29 Mar 2012

By InvestSMART ·
29 Mar 2012

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THE sharemarket rallied yesterday to a near five-month high after the Reserve Bank said global market sentiment had improved since late December.

The S&P/ASX 200 Index climbed clear of the 4300-point level, gaining 42.2 points, or 1 per cent, to 4343.5.

Options Xpress market analyst Ben Le Brun said it was a stunning session for the market, which outperformed Asian markets despite negative leads from the US and Europe and lower prices for some commodities.

"It's a refreshing change and we've gone sailing past that previous resistance mark at 4300 and things are looking particularly positive as it stands at the moment," Mr Le Brun said.

"All sectors of the market, with the exception of utilities, are in positive territory. In the morning session, we just had the defensive end of the market in the green, but the cyclical end joined the party in the afternoon and we've gone from strength to strength."

The rally was driven by comments by the Reserve Bank that confidence in global financial markets had improved markedly since the crisis over eurozone debt in mid to late 2011.

Mr Le Brun said the Australian market would have a "technical breakout" if it eclipsed the next resistance level of 4360 points, which was the top end of the trading range it had been stuck in for the past nine months.

Bank stocks were boosted by the RBA's comment that they were in a good position to withstand any turmoil.

ANZ was up 27 (1.2 per cent) at $23.45, Commonwealth put on 52? (1 per cent) to $50.38, National Australia Bank appreciated 28? (1.1 per cent) to $24.94 and Westpac advanced 21? to $21.94.

Bank of Queensland jumped 8.08 per cent to $7.65 after emerging from a trading halt entered into on Monday when it announced the sale of new shares to raise $450 million.

BOQ also on Monday flagged a $91 million first-half loss as a result of falling property values in Queensland, raising the number of its bad loans.

BOQ said yesterday it had so far raised $284 million from institutional investors.

Among the major miners, BHP Billiton was up 18? at $34.61, Rio Tinto found 43? to $64.53 and Fortescue Metals gained 12?, or 2.1 per cent, to $5.98.

In the energy sector, Woodside was up 48?, or 1.4 per cent, at $35.77, Oil Search rose 5? to $7.1 and Santos was 10? firmer at $14.45.

At the close of Australian trade, the spot gold price was down $US11.83 at $US1678.50 an ounce.

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Frequently Asked Questions about this Article…

What caused the ASX 200 rally to a near five-month high?

The rally was driven by Reserve Bank commentary that global market sentiment had improved since late December, which boosted confidence. The S&P/ASX 200 climbed past the 4,300 level to 4,343.5, and market analysts noted the session outperformed Asian markets despite negative leads from the US and Europe.

Which sectors led the market rally and were any sectors lagging?

All sectors were in positive territory during the session except utilities. The defensive end of the market led in the morning, and cyclical sectors joined in the afternoon, contributing to broader gains.

What key technical levels should everyday investors watch on the S&P/ASX 200?

The index moved clear of the previous resistance at 4,300, reaching 4,343.5. Analysts said a technical breakout would occur if the ASX 200 eclipsed the next resistance level at around 4,360 points.

How did major Australian bank stocks perform and why did they move?

Bank stocks were lifted after the RBA said banks were well placed to withstand turmoil. Reported prices included ANZ around $23.45, Commonwealth Bank near $50.38, National Australia Bank about $24.94 and Westpac roughly $21.94 — all showing gains on the session.

What happened with Bank of Queensland (BOQ) and what should investors note?

BOQ jumped after emerging from a trading halt that followed its announcement of a new share sale to raise $450 million. The bank also flagged a $91 million first‑half loss due to falling Queensland property values and an increase in bad loans; by the report it had raised $284 million from institutional investors so far.

How did major miners and energy stocks move during the rally?

Major miners were higher, with BHP Billiton at about $34.61, Rio Tinto around $64.53 and Fortescue Metals up to $5.98. Energy names also rose: Woodside traded near $35.77, Oil Search around $7.10 and Santos at about $14.45.

What did the Reserve Bank of Australia say and how did investors react?

The RBA said confidence in global financial markets had improved markedly since the euro‑zone debt crisis in mid‑to‑late 2011, and noted banks were in a good position to withstand turmoil. Those comments helped fuel the market rally and lifted investor sentiment, particularly for bank stocks.

Did commodity or precious metal prices move during the session, such as gold?

Yes. The spot gold price fell by US$11.83 to US$1,678.50 an ounce at the close of Australian trade, and some commodity prices were lower during the session even as the market rallied.