Investors Defy The Odds

Sydney Morning Herald

Wednesday July 5, 1995

By JUSTINE TRUEMAN

Hope trickled back into the Australian sharemarket yesterday as the sour memory of last week's blowout in the current account began to fade from investors' minds.

The market was expected to dither with the US market closed overnight due to a public holiday, but in a move that surprised brokers the All Ordinaries index surged in the later half of the day with good support for leading companies.

The market finished at its high of 2022.3, up 10 points on yesterday's trade.

"Today surprised a lot of observers. I would have thought it would be fairly erratic because of the lack of direction from the US but it managed to end on a positive note," said Mr Simon Bond of ANZ McCaughan.

The market may have been kicked up near its close on positive speculation about the US Federal Reserve Open Market Committee's decision on interest rates.

"There has been some conjecture that because the US economy is slowing there might be a rate cut," said Mr Philip Parker of Burrows.

But the Fed may not make a decision until the end of the two-day meeting and the both camps are fairly well stacked.

Brokers say the market has been trading between about 2000 and 2050 since May and that it will need a boost of positive sentiment this week to break through that barrier.

"The weak Australian dollar has caused offshore investors to be wary of our market and that has caused a downer in the last few days," Mr Parker said.

"But I think we're going to see a stronger market if foreign investors come back into the market."

But while some brokers were fairly confident the market should end the week buoyant others were more hesitant.

"It still could be a pretty long week. There's plenty of speculation that there could be a rate cut but there's no guarantees, and if those expectations aren't fulfilled who knows how the market will react," said Mr Eric Gale of Ord Minnett.

On the commodity front a 3 per cent rise in the price of nickel to a new five-month high boosted the resource sector.

Western Mining rose 3c to $7.84 and QNI 2c to $1.94.

In other mining stocks CRA rose 6c to $18.86 and BHP was again popular with investors, leading core stocks with its price up 18c to $17.64.

Among the industrials, ANZ rebounded 11c to $5.13 and Lend Lease rose 18c to $18.26.

Goodman Hardie Property Trust was listed on the market yesterday with units unchanged at the issue price of $1.

Meanwhile, Japan's Nikkei index closed up 74.70 at 14,830.44 while the Hang Seng in Hong Kong closed 225 points higher at 9,407.