Resources Lead Surge In Shares

The Age

Wednesday September 25, 1996

Manika Naidoo

A market rejuvenated by stronger commodity prices and America's decision not to raise interest rates yesterday prodded a resource rebound and sent banks surging to near-record highs.

The Dow Jones Industrial Average fell 20.71 points to 5874.03 despite the interest rate news, but the US Federal Reserve's decision re-energised a listless Australian market, driving the All Ordinaries Index up 24.1 points to 2252.8.

The industrial sector rose 30.8 to 3481.7, while the resource sector took heart from Tuesday night's higher copper, lead and zinc prices on the London Metal Exchange.

Mr Oliver Messenger, from Austock Brokers, said traders were surprised by the market's strength.

"Three factors generated a bit more confidence in the market - the fall in the copper stock on the LME helped sentiment, along with the weaker $A, combined with the fact they didn't raise US rates," he said.

Investors sidelined during uncertainty about US interest rates jumped back into the market, helping the miners claw back some of Tuesday's losses.

BHP gained 28 cents to $16.20, CRA 43 cents to $18.55, WMC 19 cents to $6.37 and North four cents to $3.42.

"The market could have been thinking the decision to leave rates untouched meant growth might continue for a reasonable amount of time and therefore the demand for resources might continue," said Mr Rohan Carr, of Holst Sharebrokers.

A rallying bond market drove the interest-rate sensitive banking sector up 1.8 per cent to 3593.1.

NAB was up 23 cents to $13, ANZ 12 cents to $7.04, Westpac 12 cents to $6.37 and Commonwealth 26 cents to $11.48.

The gold index was up 1.4 per cent after a $US1.30 rise in gold bullion to $US382.60 an ounce in New York.

Normandy firmed three cents to $1.78, Placer Pacific seven cents to $1.49, Great Central Mines three cents to $3.48 and Niugini Mining eight cents to $3.85.

A trend to slightly stronger retail trade helped kick Coles Myer up three cents to $4.62.

The Australian dollar traded weakly, sidelined by a focus on the greenback, which closed slightly lower on Tuesday night.

One trader said there was a general feeling the Australian dollar was overvalued, but Asian interest in Samurai bonds was keeping the local currency artificially high. It closed at 78.86 US cents from 79.06.

The bond market rallied earlier, but lost some gains during late afternoon profit taking. Ten-year bonds finished at 7.81 per cent from 7.89, and 90-day bills finished at 6.88 per cent from 6.92.