Money Finance News Australian shares rebound after big Wall Street rally

Australian shares rebound after big Wall Street rally

IFM Wrap.
Markets are volatile. Monday was up. Photo: Getty
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Australian shares rebounded from last week’s negative volatility, following a massive rally on Wall Street and European markets.

The benchmark ASX 200 jumped 1.2 per cent to 5688 in early trading.

The broader All Ordinaries index lifted by a similar amount to 5746 points – finishing the day at that level.

Meanwhile, the Australian dollar was steady at 71.2 US cents. It has bounced back from last Thursday’s flash crash, which briefly took the dollar to a 10-year low of 67.3 US cents.

Bluescope Steel (+4pc), BHP (+3.3pc), AMP (+2.5pc) and Rio Tinto (+2.2pc) were some of the big-name stocks driving the local market higher.

The major banks have also posted solid gains, rising between 1 per cent (Westpac) and 1.4 per cent (NAB).

Every sector was trading higher, with technology (+2.1pc), resources (+2pc) and materials (+2pc) being the strongest performers.

Job figures and Fed’s rate comments boost market

Global markets tanked last week after Apple issued a rare profit warning – as it blamed the weakening Chinese economy, rising US-China trade tensions and less people upgrading to new iPhones for its lowered expectations on first-quarter revenue.

However, that sell-off turned out to be short-lived as US and European markets more than recovered their losses on Friday (New York time).

Wall Street’s main indices surged – between 3.3 per cent (Dow Jones) and 4.3 per cent (Nasdaq) – after figures from the Labor Department showed the number of new jobs created in America was almost double what had been expected.

The benchmark S&P 500 also lifted strongly by 3.4 per cent.

The US economy created 312,000 new jobs in December, while economists had been expecting 176,000.

Also re-igniting the bullish sentiment were comments from Federal Reserve chairman Jerome Powell, asserting the central bank’s independence.

Mr Powell, speaking on an America Economic Associations panel, said he would not resign if US President Donald Trump asked him to.

“If the President asked you to resign, would you do it?” asked Neil Irwin, the panel moderator from the New York Times.

The Fed chairman simply replied: “No.”

Market volatility was compounded in December over reports that Mr Trump was thinking of firing the Fed chair, forcing his advisors to reassure investors that Mr Powell’s job was “100 per cent safe”.

The Friday surge in markets was also due to reassurances from Mr Powell about upcoming interest rate hikes.

Mr Powell said the Fed would be “patient” and flexible in its approach to rate increases – soothing fears that the US central bank might be raising borrowing costs too quickly.

European markets also soared, particularly London (+2.2pc), Frankfurt (+3.4pc) and Paris (+2.7pc).