Talk from China helps to boost local market
Talk that China was planning to do more to boost economic activity sent the market higher yesterday, as traders reassessed their positions on the country's prospect for growth.
Talk that China was planning to do more to boost economic activity sent the market higher yesterday, as traders reassessed their positions on the country's prospect for growth.Resource and energy stocks were swept up in the buying, lifting the bourse to its highest level in a week. The S&P/ASX200 index was up 46.4 points, or 1.1 per cent, at 4114.4.After three consecutive weeks of falls, the local market has now risen 2.1 per cent in two days. Yesterday, the All Ordinaries index was up 47.9 points, or 1.2 per cent, at 4168.1.Shares in Fortescue Metals rose for a second day as talk that China would restart some infrastructure projects forced short sellers to cover their positions. Fortescue, which has been targeted by the renowned short seller Jim Chanos in recent months, rose 34?, or 7.5 per cent, to $4.89, after rising 24? on Monday.It was joined by BHP Billiton, which was up 32? at $32.37, and Rio Tinto, which rose $1.24 to $58.14.A portfolio manager at SG Hiscock, Rob Tucker, said traders who had been bearish on China were seriously reassessing their positions yesterday, after a report that the Chinese government planned to boost activity.The rally in resource stocks was a reminder that the market had been hit by a double-whammy in the past few weeks, as fears about the euro debt crisis fed concerns about Chinese growth, with trade slowing considerably between the regions, he said."That helped accelerate the negative view on China, with shorting of China-linked stocks widespread. We have had a very long-term structural view on China, which has been positive," Mr Tucker said."In the past six to 12 months we've become more cautious, because China's steel mills still have a lot of inventory to work through, so we're not reacting to this news today of further stimulus measures just yet."Jamie Spiteri, a senior dealer at Shaw Stockbroking, said stocks had been oversold in recent weeks. Traders were starting to look at the fundamentals more closely: "Despite the fact that markets have been very skittish and volatile, there comes a point where you've got to assess the risk profile of present prices and recognise that most of our large corporates have had their share prices discounted in comparison to present and forecast earnings.".The major banks all rose yesterday, Westpac by 15? to $20.55, National Australia Bank 16? to $23.81, Commonwealth Bank 60? to $49.88, and ANZ 36? to $20.94.The banking and insurance provider Suncorp rose 13? to $7.81 after it said its insurance business was improving from a torrid 2011.Market debutant Allegiance Coal closed at 12?, 8? below its issue price of 20?.