Stocks recover big slice of Monday's slide
THE sharemarket closed higher yesterday, clawing back a large part of Monday's losses, after the central bank cut official interest rates to the lowest since the global financial crisis.
THE sharemarket closed higher yesterday, clawing back a large part of Monday's losses, after the central bank cut official interest rates to the lowest since the global financial crisis.But market observers said the quarter-percentage-point cut to the cash rate had only a modest effect and investors still appeared to lack commitment.Trading was marked by a huge drop of almost 19 per cent in Qantas shares to a record low, after the national airline issued an ominous profit warning.The S&P/ASX 200 Index finished 58.7 points, or 1.5 per cent, higher at 4043.7.CMC markets chief market strategist Michael McCarthy said currency markets expected a cut of 50 basis points and equity markets had priced in no cut, so the dollar and the sharemarket both rose."What's reflected here is the pre-positioning of the market," Mr McCarthy said. "Given the massive [recent] falls we've seen in both currency and sharemarkets, it's difficult to imagine that there are people waiting on the sideline to pull the 'sell' trigger. If they wanted to sell, they would have already done so."So what we're left with is a buying reaction in both markets. But this a lot more to do with the positioning going into it rather than any actual read of the figures."In the near term, the market would be affected by the debt crisis in the eurozone, the strength of the US and Chinese economies, and speculation on this month's Greek election, he said.Qantas fell 26.5?, or 18.7 per cent, to a record low of $1.155, after the airline said it expected a fall of up to 91 per cent in full-year underlying profit due to the troubled European economy and soaring fuel costs.Rail freight company QR National was 16? higher at $3.47 after it announced plans to cut 500 jobs.The big banks all moved ahead, ANZ rising 45? to $21.32, National Australia Bank 52? to $22.55, Westpac 39? to $20.59, and Commonwealth Bank 95? to $50.In the resource sector, global miner BHP Billiton was 41? richer at $31.16 and Rio Tinto put on 85? to $53.75.Aquila Resources found 7? to $2.86 after it moved closer to realising its $6 billion West Pilbara iron ore project.Coal seam gas miner Dart Energy was up 0.5? at 18.5? after it received approval to drill wells north of Newcastle.Gold's big run came to at least a temporary halt. At the Sydney close, it was down $US5.58 at $US1616.42 an ounce.National turnover was1.58 billion securities worth $4.15 billion, with 558 stocks up, 390 down and 372 unchanged.