Market: 2012 High, But Not For Long

The Australian market sparked yesterday for a second day in a row, despite a down day on Wall Street Tuesday night and weakness in other Asian markets.

But the gains won't last today after a rough night on markets in Europe and the US which fell after the rest of Asia lost ground.

The share price futures contract had our market opening around 18 points lower.

The Aussie dollar was also sold off here and in offshore trading and fell below $US1.04, but recovered to trade around that level in early Asian trading this morning.

Wall Street was off close to 0.5% on worries about the health of the US economy, only days after those same worries were eased by the comments from Fed chairman, Ben Bernanke. Losses were closer to 1% during trading.

European markets also lost ground with the loses ranging from 0.3% in Italy to nearly 2% in Spain.

Around Asia Japan's Nikkei 225 Stock Average was off 0,7%, Hong Kong's Hang Seng slid 0.8%, the Shanghai Composite lost 2.7 (with a sharp, late sell off) and South Korea's Kospi lost 0.4%.

Taiwan ended the day with a small 0.1% gain, along with NZ.

The fall on Shanghai was blamed on worries about corporate profits, but it will worry our market today.

For a variety of reasons, the Australian market ended well above the 4,300 point level for a second day and touched a 2012 high and the highest point since November 9 last year.

The ASX 200 ended up 1% or 42.2 points at 4343.5, firmly above the 4300 hurdle, which had proved a major resistance over the past eight months.

The All Ords gained 39.8 points to end at 4431.4, a gain of 0.9%.

That was after a 38 point (0.9%) rise on Tuesday.

Oil fell overnight while gold was weaker as well, losing $US27 to end at $US1,660 an ounce in New York.

In fact it would be fair to say that the rise yesterday to a new four month high was right against not only the recent form of the market, but the gloomy tone of recent investor sentiment.

To get two solid days of gains for the Australian market in a row goes against recent trends and you could argue that the little news there was around yesterday at least didn't add to the recent negativity about financials, consumer stocks and miners.

In any case, the ASX 200 is up 1.9% in two days, boosting the gain so far this year to 7.1%, compared with the 8% gain for the Dow up to Tuesday night and the 12% rise in the S&P 500 (and near 20% for Nasdaq)

The rise yesterday continued the reaction to the bullish statements on Monday from US Fed chairman Ben Bernanke.

It was bullish for gold and some other commodities for a while because Bernanke held out the prospects of another round of easing if the US economy fails to continue growing (he was also doubtful about the strength of the recovery in the economy).

After spending most of the past month to six weeks marking time, the market rose yesterday, gathering pace as it went and provided the gains hold today and tomorrow, it will finish March and the quarter on a much stronger note than it started.

Also helping, especially the banks, was the first Financial Stability Review of the year from the Reserve Bank which was more relaxed and gave the banks and the rest of the financial sector a tick.

But it also issued another warning to the banks not to go seeking growth for growth's sake by chasing low margin business and increasing their risks.

That warning was ignored yesterday as the banks ended a strong day, led by Macquarie.

The ANZ was up 1.2% at $23.46; Westpac closed up 15c at $21.88 after rising 1.2%, the CBA ended up more than 1% at $50.38 and NAB also rose by around 1% to end at $24.89.

Macquarie Group was also up 2% at one stage before easing to close up 1.3% at $29.92, bringing its gain in 2012 to about 26%.

Bank of Queensland is the biggest gainer among the top 200, rising nearly 5% by the close after getting the first part of its $450 million issue away without a hitch.

BHP rose 17c or half a per cent to $23.60 and RIO was up by around 0.6% at $64.47. Woolies was up 29c or just over 1% at $25.41 and Telstra closed up 5c at $3.28.

Agricultural chemicals group Nufarm has extended Tuesday's losses, dropping a further 28c or 5.6% to $4.68 as investors mulled over the warning on Tuesday that its European business was not on budget and that the company may leave markets where business risks were too high.