Confidence back as inflation fears calm

Confidence back as inflation fears calm

The Australian sharemarket regained some of its confidence yesterday and had its biggest consecutive rise in two months as inflation fears eased.
After Tuesday's 33.6-point gain, the ASX 200 benchmark index jumped a further 52.6 points yesterday to 4443.4, while the All Ordinaries index gained 49.8 points to 4400.6.
The release of the consumer price index showed inflationary pressures were under control in the September quarter, with the annual rate of inflation rising from 2.5 per cent to 3 per cent.
"The market really took off after that data came out, despite what was a softer US market," said UBS head of equities sales trading, John Garrett.
"The main concern of the market has been inflation and the US reporting season.
"The US [results] have been okay and the inflation figures are good, so that was the catalyst for people putting money back into the market."
Every sector except telecoms was up but recent favourites, resources and financials, which took the heaviest battering in the downturn, were the greatest beneficiaries of the market's new-found confidence.

"With money coming back into the market people are focusing on stocks that have been sold off," Mr Garrett said.
Investment bank Babcock& Brown, which was stripped of value in the past four weeks, jumped $1.16 to $17.09, giving it an 8.3 per cent rise in two days. But this price was still well short of its September 30 record high of $21.85.
The fresh confidence in the market gave market-related stocks including the Australian Stock Exchange, the Sydney Futures Exchange and Challenger a healthy boost.
Gold stocks led the resources charge after an increase in the overnight spot price of the precious metal.
Lihir Gold was the biggest winner in the ASX 200, jumping 12c to $1.73.
Market analyst David Land from CMC Markets said investors may have over-reacted to the recent negative news about the closure of one of Lihir's mines, which might have led to an overzealous sell-off of the stock.
In a similar story, Newcrest recovered 57c to $17.85 but still remained short of its $20.25 price two weeks ago.
The other big resource stock movers were BHP Billiton, which gained 33c to $20.42 and Woodside Petroleum, which added $1.13 for a $32.03 close