$a Slumps But Stockmarket Rise Continues

The Age

Wednesday June 28, 1995

JUSTINE TRUEMAN, TOM ALLARD

Sydney.

Anxiety ahead of the release of the May current-account figures tomorrow and renewed weakness in commodity prices triggered Australian dollar selling on offshore markets yesterday, driving the local unit as much as a half a cent lower.

Surpringly the sharemarket shrugged off the uncertainty and continued its upward path.

The dollar sell-off began in London late on Tuesday night and continued in New York trading as foreign investors piled out of the currency, pushing it to a month-long low of 71.30 US cents.

The currency opened locally looking wobbly at 71.38 US cents, but local support, most noticeably from exporters, made it rise gradually to a 71.43 close, 0.43 US cents down on its previous finish.

Wall Street had dipped a further 8.6 points to 4542.6 and the Japanese sharemarket went down again, losing 140 points to close at a 34-month low at 14,618.07. Japanese investors are concerned about US- Japan trade-brawl talks, and about this week's economic stimulus, which is considered unlikely to rejuvenate the economy.

Despite the international gloom, the local market firmed, closing eight points higher at 2034.9 with heavy demand in the gold sector providing a solid platform.

The gold index rose 1.6 per cent even though the price had fallen 80 US cents to $US389.90 an ounce in New York overnight.

Brokers attributed the strong rise in the sector to the weakness in the currency and the doubt surrounding US-Japanese trade talks.

Comments by the Treasurer, Mr Willis, that the falling Australian dollar was bad for inflation helped push bond yields higher, with the 10-year yield up five points to 8.85 per cent. The 90-day bank bill rate rose one point to 7.58 per cent.

Among the bluechip shares, BHP was up 10 cents to $17.60, Western Mining rose nine cents to $7.84 and CRA lifted 12 cents to $19.32.

Among the best individual sharemarket performers were Placer Pacific, up 11 cents to $3.23, and Great Central Mines which lifted 10 cents to $3.10 with more than two million shares traded. It was rumored that the heavy turnover in Great Central was the result of speculation about a takeover bid.

Among the industrials, News Corporation ordinary shares rose five cents to $7.90, while its preferred shares edged up one cent to $7.05 on 3.5 million shares traded.

In the banking sector, CBA picked up three cents to $9.47, ANZ closed two cents higher at $5.09 while NAB fell two cents to $11.30 and Westpac dropped four cents to $5.10.