Wall St Hits Record

Sun Herald

Sunday November 24, 1996

By BRETT THOMAS and DAVID POTTS

THE dollar soared almost half a cent and sharemarkets rallied around the world but brokers warned Australian shares would lag behind tomorrow.

London jumped 65 points followed by a 53-point gain to a record on Wall Street on hopes of strong, non-inflationary economic growth.

The dollar closed at US81.36c but in late trading had climbed to US81.45c despite a stronger US dollar against currencies other than the pound. On cross rates the $A rose to 48.5p. It has gained more than US2c in a week.

The dollar is rising because of Australia's relatively high interest rates and increases in some commodity prices. Its sudden strength is keeping the sharemarket on the sidelines.

Brokers were measured in their reaction yesterday to the good news from overseas, concerned the runaway dollar would dampen metal stocks in tomorrow's trading.

Michael Heffernan of Shaw Stockbroking predicted the market would rise 10 to 15 points, pulled down by metal and gold stocks. The price of copper fell $US20 a tonne to $US2,333 a tonne, gold was steady at $US377 an ounce but down in Australian dollars from $471 to $459 an ounce on Friday.

The US35c rise in oil prices was wiped out by the soaring dollar.

The buoyant moods in London and New York weren't felt by Australian stocks.

A broker at Ord Minnett said depository receipts for Australian shares "virtually didn't trade" on Friday, despite the Wall Street surge.

One hope for the Australian market, however, is the fact that sentiment changed suddenly in London, where shares experienced the biggest one-day gain this year.

The strengthening dollar could also generate its own momentum, giving foreign investors the double benefit of high interest rates and a currency gain.

The flood of money could then spill over into the sharemarket.

The yield on the benchmark 30-year US bond rose slightly to 6.44 per cent. The Dow was pushed up by surging technology shares, closing at 6471.76 - its 42nd record this year.