Leading the sharemarket’s turnaround on Wednesday was buying in the big four banks. Photo: Louie DouvisThe Australian sharemarket shrugged off a weak lead to resume its March rally, lifted higher by buying in the big banks and a strong day for healthcare stocks.
Early in trade the market fell by as much as 26 points before staging a 1.5 per cent turnaround to close at the day’s highs.
The benchmark S&P/ASX 200 index ended 1 per cent or 49 points higher to 5157.2. The broader All Ordinaries rose 0.9 per cent or 46 points to 5215.7.
The local market’s rally defied the sentiment around the Asian region, where bourses were mostly lower, including the Shanghai Composite Index which was down 2.5 per cent in afternoon trade while Japan’s Nikkei was down 1 per cent.
Asian indices took their lead from European and US markets which fell after Chinese data showed exports from the world’s second biggest economy slumped, helping whack miners Rio Tinto and BHP Billiton, which fell 9.4 per cent and 8.5 per cent respectively in London. Disappointing Japanese gross domestic product numbers also weighed.
The big miners’ losses were less dramatic on Wednesday however, with BHP down 1.9 per cent to $17.86 and Rio Tinto down 2.1 per cent to $44.30. Pure play miner Fortescue Metals Group fell 2.9 per cent to $2.71.
The company defended its 23.7 per cent jump in shares on Monday ahead of an announcement of a joint venture with Brazilian miner Vale, saying the rally was related to a lift in iron ore prices and the high level of short trading in the shares.
While miners’ share prices had recovered of late, with the materials sub-index rising 14.6 per cent since the market’s nadir on February 10, the recovery in commodities was tentative, and it was too soon to call an end to the rout, CMC Markets chief markets analyst Ric Spooner said.
“I think there are still enough risk factors around to say that the more likely scenario is that we won’t see a really confident rebound for a while,” he said.
The local market also shrugged off a disappointing consumer confidence reading by the Westpac-Melbourne Institute survey. The main confidence index slipped 2.2 per cent from February to March to 99.1, a reading below 100 meaning pessimists outweigh optimists.
Upsetting consumers was a combination of tax reform, a possible housing crash and the global market turmoil, Westpac said on Wednesday.
Ultimately driving the market’s whipsaw movements were the result of rapidly shifting sentiment towards the banks and the miners, Aurora Funds Management portfolio manager Sheriden Hure said.
“There’s certainly a lot of divergence within the market depending on which sectors you’re looking at on a day to day basis,” Ms Hure said. “Sentiment in the banks and resources can send it all one way or the other.”
The banks all posted strong gains. Westpac Banking Corporation climbed 2.3 per cent to $32.53, National Australia Bank added 2.6 per cent to $27.55, Commonwealth Bank of Australia rose 1.1 per cent to $76.31 and ANZ Banking Group rose 2 per cent to $25.48.
The moves suggested the bank buyers had taken a wait-and-see approach after Tuesday’s falter, Mr Spooner said.
“Now it is telling us they’re not waiting any longer,” Mr Spooner said.
Among other blue chips, Woolworths rose 1.5 per cent to $23.45, Wesfarmers rose 1.7 per cent to $41.56 and Telstra added 1.2 per cent to $5.16.
Healthcare was the day’s best performing sector, up 1.6 per cent on a lift from CSL, which rose 2.2 per cent to $104.70.
The worst performer was the energy index, down 2.7 per cent on falls in Woodside Petroleum, which ended 2.7 per cent lower to $26.83, Caltex which fell 3.2 per cent to $31.42 and Oil Search which lost 2.5 per cent to $7.23 after oil prices eased overnight on Tuesday.
Materials was the only other sector to post a loss, down 0.7 per cent.
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