The Australian sharemarket is expected to keep rising when trading resumes on Friday after United States stocks strengthened amid hopes of success in U.S. peace talks with Iran.
A 0.4% increase in the ASX 200 is in prospect according to the Australian Securities Exchange (ASX) trading with the June share price index contract last quoted 35 points or 0.40% higher at 8,681 points at the time of writing.
The Australian benchmark indicator had gained 1.5% on Thursday in what Burrell Stockbroking wealth adviser Adam Dight called “a dead cat bounce”.
He said clients were being advised to reduce cash holdings and invest in selected stocks, including property trusts that had been heavily sold off.
“We know stocks bottom with bad news and you can’t get worse news than the (Federal) Budget (which increased taxes on property and other assets),” he said.
Preferred property trusts included Scentre Group (ASX: SCG), GPT (ASX: GPT), Stockland (ASX: SGP) and Charter Hall (ASX: CHC).
He also liked BHP (ASX: BHP) and Rio Tinto (ASX: RIO), which are benefitting from their exposure to the rising copper price, which has added 10% since the start of May.
“Apart from resource stocks, there’s nothing to get excited about,” Dight said.
The Dow Jones Industrial Average added 0.6%, the S&P 500 put on 0.2%, and the Nasdaq Composite edged 0.1% higher in volatile U.S. trading on Thursday (Friday AEST) as stocks rebounded from a morning sell-off as oil prices eased.
Investors assessed updates on the peace talks, with some officials talking of progress as both sides took opposing stances over Tehran's uranium stockpile and control of the Strait of Hormuz.
Glenmede chief of investment strategy and research Jason Pride said trading on Thursday was choppy as investors reacted to speculation about geopolitics, now that the quarterly reporting season had ended.
“We're not going to suddenly get any more good surprises out of earnings, which means that market attention is now back to Iran,” he was quoted as saying in a Reuters story.
“The market, on a near-term basis, is going to be finding its way based on rumours or actual announced deals regarding Iran."
The Australian sharemarket had closed higher on Thursday as weaker-than-expected unemployment numbers lifted expectations the Reserve Bank of Australia (RBA) would not raise interest rates, with the ASX 200 Index gaining 1.5% to 8,621.7 points.
In fixed interest markets, the Australian Government bond yield curve continued to steepen as two-year rates dropped by 0.09% to 4.606% and 10-year rates rose 0.20% to 4.956 at the time of writing.
