A rebound in the big banks helped Australian shares recoup around half of yesterday's losses this morning, despite further weakness in Asia.
At lunchtime the ASX 200 was 54 points or 1.1% ahead at 5034 after hitting a session high of 5055. Traders used yesterday's 2.3% plunge on the index as an excuse to snap up financials +1.4%, gold stocks +2.5% and energy stocks +1.2%. Defensive sectors and the Small Ordinaries +1.8% also saw strong buying.
The dollar moved higher as analysts interpreted comments by Reserve Bank Governor Glenn Stevens this morning as a signal that rates are likely on hold for the immediate future. The Aussie was buying $US1.0288.
"Having been under attack overnight to the tune of a four-month low, Governor Stevens' comments have also seen the Aussie dollar fight back strongly, up half a cent in early trade on the view that while keeping their options open the Reserve Bank may not be looking to ease policy further anytime soon," CMC Markets trader Niall King told Fairfax.
Asian markets extended yesterday's declines. Shanghai fell 0.08%, Hong Kong's Hang Seng 0.83% and Japan's Nikkei dropped 0.97%. Dow futures were recently up 16 points or more than 0.1%.
Crude oil futures edged up four cents this morning to US$93.05 a barrel. Spot gold firmed $3.80 to US$1,580.20 an ounce.
Hindsight indicates the thing to do this morning was to buy banks, gold stocks, mid-caps - pretty much anything really - at the open with your ears pinned back. Well done if you did that. I thought we might see some cautious buying today but the strength of this bounce caught me off-guard, so I missed the boat. A few more days of weakness to get set would have been nice. Had a first dab at FAR on pullback but yet to see any return on it. Just missed a few others.
