Shares clawed back a fraction of their losses for the week after a night of wild swings saw Wall Street rally sharply late in the session.
The ASX 200 rebounded 73 points or 1.3% to 5907 as buyers returned to the market following two harrowing sessions when the benchmark index lost almost 300 points as global markets plunged. The index put on more than 100 points at the open before caution set in amidst concern that the global correction may have further to run.
Overnight, US stocks swung between heavy losses and solid gains before pushing decisively higher in the final hour of trade. The Dow swung from a low of -567 points to a high of +600 points before closing with a rise of 567 points or 2.33%. The broader S&P 500 added 1.74%.
“Today’s market action is a classic of a market that has searched for a bottom,” Peter Cardillo, chief market economist at First Standard Financial in the US, told Reuters.
The metals & mining and energy sectors led the rally on the ASX, rising 2.2%. Also strong: the Small Ords +2.2%, consumer discretionary +1.8% and financials +0.5%. Select defensive sectors remained under pressure, including utilities -0.6% and gold -2%.
Asian markets trimmed yesterday's substantial losses. China's Shanghai Composite gained 0.91%, Hong Kong's Hang Seng 2.5% and Japan's Nikkei 3.16%. US equity futures were modestly negative but generally stable relative to this week's turbulence. S&P 500 futures were recently down 5.25 points or 0.19%.
Crude oil futures bounced 55 cents or 0.87% this morning to US$63.94 a barrel. Gold futures edged up $2.30 or 0.17% to US$1,331.80 an ounce. The dollar was buying 78.98 US cents.
A good day for long-term holders and traders who had the courage/conviction/blind optimism to buy yesterday and hold overnight. Wall Street respected the Rule of Threes, even if it looked touch and go in the middle of the session. There's a fair possibility of further gains in the US tonight, perhaps even tomorrow night, but a retest of these lows is also a chance in the weeks ahead. Corrections don't usually end this quickly. If nothing else, we have likely seen the end of a period of abnormally low volatility. Some cautious buying on the ASX today but you wouldn't call it a frenzy, at least not yet. Plenty playing wait and see. The falls have driven a steamroller through SpecLand. Injected some value back into some sectors, but sentiment can take a few sessions to heal. Trading: started the session empty-handed and found little to occupy me after two exceptionally busy days. My approach involves setting price alerts to try to capture oversold entry points. For the first two days of this week the PC speakers dinged several times a minute all day. Today: silence. Not one ding. Enjoyed the peace but not the absence of opportunity.
