Market closes with solid gains
Demand for defensive stocks helped the Australian sharemarket shrug off losses on Wall Street where a raft of European and US sanctions on Russia triggered a scramble for safe-haven bonds.
The S&P/ASX 200 index got off to a slow start by spiked higher mid-morning as domestic bond yields fell and traders positioned for a "dovish" yield outlook from the US Federal Reserve monetary policy statement tonight. The index climbed 34.5 points, or 0.62 per cent, to a fresh six-year high of 5622.9 points.
Last night US stocks reversed early gains to close 0.5 per cent down, while US 10-years dropped 3 points to 2.45 per cent and German Bunds tumbled 3 points to a record low of 1.12 per cent on fears of trade and eurozone growth repercussions from sanctions on Russia.
"The Russia sanctions are likely to remain more of a regional issue and only a modest restraint on global risk appetite," Royal Bank of Scotland currency strategist Greg Gibbs said. "The still-easy global financial conditions are likely to keep investors focused on a search for yield. This appears to have helped boost Asia regional asset markets on a rotation out of Europe."
He said the bulk of the sanctions were in the financial sector.
"They are not a total ban on business but are intended to block medium- and long-term funding to Russian companies and banks," he said.
The Shanghai composite index was marginally higher at the close of the ASX as energy stocks surged and property stocks slumped following a Communist Party announcement of a high level corruption probe.
In Tokyo the Nikkei index was up 0.2 per cent despite Japanese industrial production slumping 3.3 per cent in June, the biggest decline since the Tsunami in March 2011.
The Australian dollar slipped US0.2¢ to US93.80¢ while government 10-years fell 4.8 points to 3.422 per cent ahead of US June-quarter GDP data tonight.
Spot iron ore rose one per cent to $US95.30 a tonne yesterday while Dalian iron ore futures were off one per cent today.
Copper lost 0.8 per cent to $US7060 a tonne while gold fell $US10 to $US1299 an ounce.
More to come…
