The Australian share market is trading higher, led by a stronger resources sector and gains amongst the big banks.
CMC Markets chief market strategist Michael McCarthy said the Australian market had bounced back from its reversal yesterday as investors again contemplated the impact of Friday’s interest rate cut in China.
China’s decision to cut interest rates to stimulate economic growth had led to a rally on the local bourse on Monday, but the gains were lost on Tuesday.
“Today (Wednesday), I believe that analysts’ and economists’ reflections on that move in China are starting to feed into the stock valuations,” Mr McCarthy said.
He said resources stocks were gaining support as investors looked at the potential for commodity prices to come off their steep falls and a better economic growth scenario in China.
At 1200 AEDT, In the resources sector, mining giant BHP Billiton was 38 cents higher at $32.48, and Rio Tinto improved $1.20 to $58.61.
However, Fortescue Minerals eased 0.5 cents to $2.805 after iron ore prices fell below $US70 a tonne on Tuesday.
Among the major banks, Commonwealth Bank was up 48 cents at $80.65, National Australia Bank gained 22 cents at $32.37, Westpac advanced 44 cents to $33.04, and ANZ lifted 30 cents to $32.40.
Medibank Private shares were 1.5 cents lower at $2.125.
Mr McCarthy said there was clear pressure on the stock price of Medibank Private.
“It was always going to be a trade-off between valuation and popularity – it looks like popularity is waning.”
The health insurer debuted on the ASX at $2.22 on Tuesday but fell during the afternoon to end slightly below the $2.15 institutional investors paid for a stake in the company.
But it was up on the $2.00 retail investors paid.
KEY FACTS
* At 1209 AEDT on Wednesday, the benchmark S&P/ASX200 index was up 51.7 points, or 0.97 per cent, at 5,386.5 points.
* The broader All Ordinaries index was up 49.4 points, or 0.93 per cent, at 5,370.3 points.
* The December share price index futures contract was 46 points higher at 5,396 points, with 13,536 contracts traded.
* National turnover was 562.4 million securities worth $1.35 billion.
