Australian shares advanced for a second day as Asian markets rallied ahead of a weekend of meetings among European finance ministers.
At lunchtime the ASX 200 was up 81 points or 2% at 4153 with all sectors trading higher except the defensive gold sector, off 0.2%. Property trusts +2.9%, energy stocks +2.8% and financials +2.6% spearheaded the gains as investors welcomed a co-ordinated liquidity pump announced overnight by the European Central Bank.
"What these authorities are trying to do here is pre-empt any panic over banks' access to short-term funding," Prasad Patkar of Platypus Asset Management in Sydney told Bloomberg. "Anything that suggests they will act pro-actively to avoid another Lehman-style crisis will help equities, commodities and other risk assets because of how oversold they are, and how bearishly everybody is positioned."
European Union finance ministers gather tonight for a two-day meeting attended by US Treasury Secretary Tim Geithner. However, economists at Capital Economics warned that the meeting was unlikely to produce dramatic results.
"While policy-makers are likely to restate that Greece remains an integral part of the region and that other economies in the region are not facing as severe problems, a barrage of new measures to tackle the euro-zone's problems appears unlikely," Capital Economics told MarketWatch.
Asian markets followed European and US equities higher this morning. Japan's Nikkei added 1.74%, Shanghai 0.31% and Hong Kong's Hang Seng 2.1%. Dow futures were recently up two points or less than 0.1%.
Crude oil futures rallied 23 cents this morning to US$89.42 a barrel. Spot gold fell another $22.50 to US$1,769 an ounce. The dollar was buying US$1.0318.
A much more promising morning, with the market holding its gains through to lunchtime for the first time in a week and a half. Also interesting to see trading volumes have been rising all week - another sign that the market is marking a short-term bottom? Add the fact that gold is unwinding fast and this is starting to feel like a genuine move. Just one trade for me this morning - a quick, profitable scalp in PLA that will fund another trip to the footy tonight, even at SFS drinks prices. Go Tigers.
