THE sharemarket closed higher yesterday for a second straight day despite giving up early gains after official figures showed the economy grew at almost twice market expectations.
The benchmark S&P/ASX 200 Index closed up 11.6 points, or 0.3 per cent, at 4055.3.
The market opened about 0.4 per cent higher as investors took their cues from a positive night on overseas markets.
Investors then reacted positively to figures that showed the domestic economy grew by a better than expected 1.3 per cent in the March quarter. For the year to March 31, gross domestic product increased by 4.3 per cent.
However, the sharemarket rally petered out in the afternoon as investors dug a bit deeper behind the headline numbers.
Lonsec senior client adviser Michael Heffernan said while the GDP data looked good on the surface, it was not necessarily a true indication of how the economy was travelling.
"There was a bit of ebullience after the national accounts figures came out," he said.
"However, closer analysis shows that the major reason why real GDP went up was because overall prices went down, largely due to export prices falling."
The best-performing sector was gold, which rose 2.7 per cent. At the Sydney close, spot gold was up $US9.53 at $US1625.95 an ounce.
Other big market sectors to post gains included metals and minerals stocks (up 0.5 per cent) and materials (up 0.4 per cent).
IG Markets strategist Stan Shamu said the growth numbers prompted a sharp rise in the dollar, which capped gains in equity markets as industrials stocks struggled, falling 0.6 per cent.
The big four banks ended mixed, with the financial sector overall gaining 0.18 per cent.
While ANZ firmed 2? to $21.34 and CBA rose 5? to $50.05, NAB backpedalled 30? to $22.25 and Westpac was down 24? at $20.35.
None of the big four have announced their response to the Reserve Bank's 25-basis-point easing in the cash rate.
Qantas Airways reached fresh lows as investors continued to react negatively to Tuesday's shock profit downgrade. The stock fell 3?, or 2.6 per cent, to a record low of $1.125, extending Tuesday's 19 per cent decline.
National turnover was 1.6 billion securities worth $4 billion, with 549 stocks up, 390 down and 406 unchanged.
Frequently Asked Questions about this Article…
How did the S&P/ASX 200 perform yesterday and what was the closing level?
The S&P/ASX 200 closed higher for a second straight day, up 11.6 points (0.3%) at 4,055.3 after opening about 0.4% higher on positive cues from overseas markets.
What GDP news moved the Australian sharemarket and how big was the surprise?
Official figures showed the domestic economy grew 1.3% in the March quarter and gross domestic product rose 4.3% for the year to March 31, a stronger-than-expected result that helped lift the market at the open.
Why did the early market rally fade in the afternoon despite stronger GDP numbers?
Investors dug deeper into the national accounts and Lonsec adviser Michael Heffernan noted much of the GDP increase reflected lower overall prices — largely from falling export prices — rather than a clear improvement in economic momentum, which trimmed enthusiasm later in the day.
Which sectors led gains and which sectors struggled on the day?
Gold led sector gains, rising 2.7%, with spot gold up about US$9.53 to US$1,625.95 an ounce; metals and minerals and materials also posted modest gains. Industrials struggled and fell around 0.6%, partly as a stronger dollar capped equity gains.
How did the big four banks trade and did they react to the Reserve Bank rate cut?
The big four ended mixed while the financial sector was slightly higher overall; ANZ traded up to $21.34, CBA to $50.05, NAB was at $22.25 and Westpac at $20.35. None of the big four had announced a response to the Reserve Bank's 25-basis-point easing of the cash rate.
What happened to Qantas shares after its profit downgrade?
Qantas hit fresh lows as investors continued to react to Tuesday's shock profit downgrade — the stock fell about 2.6% to a record low near $1.125, extending the prior 19% decline.
Did currency movements affect the market on the day?
Yes — IG Markets strategist Stan Shamu said the stronger-than-expected growth numbers prompted a sharp rise in the Australian dollar, which helped cap further gains in equity markets.
How active was trading and what was the overall market breadth?
National turnover was 1.6 billion securities worth about $4 billion, with 549 stocks up, 390 down and 406 unchanged, indicating mixed breadth across the market.
Call 1300 880 160
Start a chat
Schedule a call
