Australian shares hit a two-month high this morning as yield stocks benefitted from the prospect of further interest rate cuts and Asian markets traded mixed.
At lunchtime the ASX 200 was 45 points or 0.9% stronger at 5093 and on track for an eighth straight positive close. A broad rally lifted all sectors bar property trusts (-0.3%). Notable gains included consumer staples +1.4%, financials +1.3%, industrials +1% and the Small Ordinaries +1.1%.
The gains followed by a speech by Reserve Bank Governor Glenn Stevens yesterday that appeared to point to a cut to the cash rate at Tuesday's monthly meeting. The dollar dropped nearly two cents against the greenback yesterday and was this morning buying 90.37 US cents.
"The prospect of another rate cut is obviously a lot higher than people thought," Donald Williams, chief investment officer at Platypus Asset Management, told Fairfax. "It makes sense to put more money in yield. People will continue to hunt for these high-yielding equities."
The Shanghai Composite rallied for a second day, rising 0.56%. Hong Kong's Hang Seng put on 0.31% and Japan's Nikkei fell 0.77%. Dow futures were up eight points or less than 0.1%.
"Traders globally seem to be in a wait-and-see mode before the outcome of the Fed's meeting [tonight] on the timing of quantitative easing tapering," the chief fund manager at Ichiyoshi Asset Management in Tokyo told Reuters.
Spot gold spiked $6.30 this morning to US$1,332.80 an ounce. Crude oil futures rallied 27 cents to US$103.39 a barrel.
A bullish morning courtesy of Glenn Stevens. However, most of the gains seemed to get baked in pretty quickly. I did nearly all my trading in the first 20 minutes. Thought we were in for a ripper but the market nodded off after that. Managed quick wins in ELM and MAD. Also took the chance to exit MTS from yesterday for brokerage - one positive about this sleepy market is that mistakes are not being punished hard. Added SGP more recently. Lordy, I hope Wall Street sparks up tonight and injects some life into world markets.
