Shares Up, Despite Rise In Bond Yields

The Age

Tuesday June 14, 1994

David Adams

Riding on the back of resource stocks, the sharemarket shrugged off a rise in bond yields and inflation rate fears yesterday to close higher.

Boosted by offshore commodity prices, the All Ordinaries index rose 7.2 points to close at 2076.6, after reaching a midday high of 2080.8.

Resource stocks were strengthened as commodity prices continue to soar. Aluminium led the charge at the London Metals Exchange on Monday night, closing at $US1404 a tonne, while copper jumped to $US2405.50 a tonne.

Among Australian resource stocks, Western Mining leapt 26 cents to $8.40, while BHP rose six to $18.70 and CRA two cents to $18.96.

Mr David Perry, the head of research at Austock Brokers, said that bond yields, which rose higher than expected yesterday, had a dampening effect on the sharemarket.

Elsewhere, Coles Myer jumped nine cents to $4.45, continuing its strong recovery from a low of $4.13 earlier this month when the stock was hit by speculation that the financially stretched Kmart Corp of the US would free cash by selling all or part of its 21.5 per cent stake in Coles.

Analysts said institutions were now selling Woolworths shares to buy into Coles in the belief that the retailer's shares had been pushed too low. Woolworths gained one cent to close at $2.96.

Despite the rise in bond yields, the banking sector climbed 0.5 per cent yesterday to 2630.7 points. ANZ closed five cents higher at $4.13, the National Bank rose two cents to $11.14, while the Commonwealth Bank fell two cents to $7.72.

Brokers said fears of rising inflation and interest rates, ahead of the release last night of the US consumer price index figures for May, had a markedly negative effect on the industrials market.

The Alcohol and Tobacco index plummeted 2.3 per cent to close at 5340.4 points. Foster's Brewing Group's share price reached its lowest point since June last year, closing at $1.11.

North Broken Hill performed well ex-dividend, dropping only three cents to $3.66 after releasing a four-cent dividend.

In contrast, Australian Consolidated Press performed poorly ex- dividend, closing 23 cents down at $4.12, after releasing a 14-cent dividend.