The ASX pared two days of heavy selling with a sharp rebound ahead of this afternoon's Reserve Bank rate announcement and a public holiday in the US tonight.
At the halfway mark, the ASX 200 was up 103 points or 1.8% at 5787 and within reach of its best rally of the year as the financial sector surged 2.3% to a seven-week high. Also strong were telecoms +2.2%, energy +1.6% and metals & mining +1.5%.
The consumer discretionary put on 1.9% following news that retail sales improved 0.6% in May, extending a 1% increase in April. The rise was three times the 0.2% improvement economists expected. A separate report showed consumer confidence picked up last week to its highest level since April.
"The rise in confidence likely reflects ongoing strength in the labour market and appears to have outweighed consumers' concerns about the rise in retail electricity prices," ANZ's head of Australian economics David Plank told Fairfax.
The Reserve Bank met this morning to assess the cash rate and will release a statement and any change at 2.30pm EST this afternoon. Trading on Wall Street is suspended tonight for the Independence Day holiday. Dow futures were recently ahead 12 points or 0.06%.
A mixed session in Asia saw China's Shanghai Composite ease 0.47%, Hong Kong's Hang Seng add 0.08% and Japan's Nikkei gain 0.43%.
Crude oil futures retreated 27 cents or 0.57% this morning to US$46.80 a barrel. Gold futures advanced $2.60 or 0.21% to US$1,221.80 an ounce. The dollar was buying 76.62 US cents.
A predictably slow session at the spec end, but a big move further up the food chain. Buyers taking advantage of reduced volumes here with the impending break in the global trading cycle tonight putting a brake on selling resistance. The XJO seems to be settling into a trading range somewhere between 5650 and 5840. Range seems to be tightening, raising the possibility of a breakout. Trading: missed bounce opps in 88E and RMX, but got enough out of VPC to make today worthwhile.
