AU Best day on sharemarket since 2011 as RBA leaves interest rates steady at 2.75 per cent
Property Here - Tuesday, July 02, 2013
Shares gained about $39 billion in value, in the largest one-day rise for the ASX200 index since October 6, 2011.Source: AFP
THE sharemarket has posted its strongest day in 20 months as the global economic outlook improves and interest rates remained on hold.
Shares gained about $39 billion in value on Tuesday, in the largest one-day rise for the ASX200 index since October 6, 2011.
CMC Markets chief strategist Michael McCarthy said the market had regained all of Monday's losses, which was caused by worries about manufacturing in the world's major economies.
Data from the US and Europe overnight had painted a more optimistic picture.
"It's been a big bounce back from yesterday's pre-emptive sell off,'' he said.
"There's a better growth outlook for the globe and a better outlook from the Reserve Bank.
"The global outlook has improved, regardless of what happens in China, and given we're pricing a worst case scenario in China any pullback should lead to rallies in resource stocks.''
Interest rates stay on hold Source: News Limited
The market added to its early gains when the Reserve Bank of Australia (RBA) left the cash rate steady, but said it still had scope for further rate cuts.
Interest rates were left on hold at 2.75 per cent at the Reserve Bank's monthly board meeting.
The steep fall in the Australian dollar since mid-April from $US1.05 to US92c took the pressure off the RBA to act straight away.
But economists said homeowners can expect further rate cuts in the months ahead as the central bank retained its easing bias as the economy transitions away from the mining boom.
This RBA decision comes as the share market has clawed back most of yesterday's losses after the ASX 200 dropped 2 per cent on Monday on fears of a slowdown in China.
But a slew of upbeat data from the US and Europe has fuelled optimism about the global outlook and overshadowed concerns about China.
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