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US and Australian stocks bounce back

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US stocks have finished solidly higher Wednesday morning Australian time following a mixed bag of economic data and earnings reports, snapping a five-day losing streak for the Dow Jones Industrial Average.

At the closing bell on Tuesday, the Dow advanced rose 89.27 (0.56 per cent) to 15,927.15.

The broad-based S&P 500 jumped 10.89 (0.61 per cent) to 1,792.45, while the tech-rich Nasdaq Composite Index tacked on 14.21 (0.35 per cent) at 4,097.82.

The market had been primed for a rally after significant losses on Thursday and Friday and a more modest decline Monday, said Mace Blicksilver, director at Marblehead Asset Management.

“The market’s been so weak that it’s entitled to a rally-back kind of day,” Blicksilver said.

Blicksilver rated Tuesday’s report showing rising consumer confidence “quite good,” but said it was offset by a “terrible” report on durable goods – US orders sank 4.3 per cent in December against expectations of a rise.

Earnings reports were also mixed, with a disappointing outlook from Apple offset by strong results from Pfizer, Ford Motor and others.

Despite Tuesday’s overnight gains, the market is still in a “rocky” phase and could see further volatility this week and after, Blicksilver said.

Australia’s sharemarket is higher after Turkey’s move to head off a potential domestic crisis boosted global investor confidence and dampened fears about troubles in emerging markets.

A major drag on equities recently has been concerns about a slowdown in emerging markets, in the wake of a sharp fall in the value of Turkey’s currency, the lira, CommSec market analyst Steven Daghlian said.

“There has been some significant falls in the Turkish lira, which has created some concerns for stability in its market and possible contagion in emerging markets,” he said.

But Turkey’s central bank lifted interest rates dramatically overnight, which pushed up the value of the lira and helped lift sentiment surrounding emerging markets.

Resources stocks were the big winners on the local market, with BHP Billiton up 44 cents to $36.75, Rio Tinto up $1.20 at $65.51, while iron ore miner Fortescue Metals gained 14 cents to $5.29.

Oil and gas explorer Drillsearch Energy added nine cents, or more than six per cent, to $1.52 after increasing its 2014 production guidance by around a million barrels.

Atlas Iron shares were seven cents higher at $1.02 after the company also lifted its full year production guidance.

But engineering firm Forge Group dropped 10 cents, or 11 per cent, to 80 cents after cutting its earnings forecast for 2013/14, to a loss of up to $25 million.

The major banks were all slightly higher. Commonwealth Bank was up 28 cents at $74.41, National Australia Bank had gained 12 cents to $33.45, ANZ had lifted 15 cents to $30.29 and Westpac was 15 cents higher $30.93.

Telstra was three cents weaker at $5.09.

 

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