Mining Heads Buying Spree

Sydney Morning Herald

Thursday July 13, 1995

By JUSTINE TRUEMAN

The Australian sharemarket burst through the 2100-point barrier to an 11-month high yesterday with investors clamoring to buy into the mining sector as commodity prices continue to surge.

Yesterday's buying spree was triggered by another record high on Wall Street overnight when the Dow Jones index leapt 46.69 points to close at 4727.29.

This set a bullish tone from the beginning of the day when the market galloped to a 2131 high before easing back to 2120.8, up 26.1 points.

The enthusiasm was reflected in a flurry of activity with a hefty 278.9 million shares traded, valued at $739.2 million.

The All Ords was also propelled by a rush of trading in the futures market. The September SPI contract jumped 21 points to finish at 2164 on 11,443 contracts traded.

A number of brokers reported that a handful of offshore hedge funds had bought into the market, setting off a series of arbitrage trades.

As has been the case for the past week, the mining sector grabbed the lion's share of attention with the All Resources index lifting 30.4 points, or 2.3 per cent, to 1373.4. Overnight in New York, copper kicked $US2.50 a lb higher while strong gains were registered in aluminium, nickel and zinc.

Market observers said shrinking stockpiles of metals heightened demand.

The gold sector was also up strongly - 3.7 per cent or 71.2 points - on an overnight increase in the price of bullion of $US3.60 an ounce.

While some said international buying was a significant factor in yesterday's rally, others focused on the momentum behind the market, which has been building up since the US Federal Reserve announced a cut in interest rates last week.

Most brokers are confident the good news will continue, but say if the Federal Government announces an election it may have a dampening effect.

Employment figures were another positive, though some brokers played down their influence.

Several of the major stocks, particularly in mining, gained from yesterday's rise. BHP lifted 30c to $19.08 its best performance for weeks, CRA rocketed 58c to $20.98 and Comalco rose 25c to $6.10.

After strong gains during the week, the Japanese Nikkei index was down marginally by 100.07 points or 0.60 per cent to 16,505.67.

The Hang Seng index in Hong Kong rose 106.45 or 1.10 per cent, to 9,746.07.