PERTH: The Australian sharemarket surged more than 1 per cent as a slip in the Australian dollar sparked international investor buying of high-yielding stocks.
It was the market’s best one-day gain in a month, while the financial sector enjoyed its best session in two months.
At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index was 64.1 points, or 1.12 per cent, higher at 5,777.2, while the broader All Ordinaries index was up 60.3 points, or 1.06 per cent, at 5,774.9.
The local sharemarket surged as offshore investors flooded the market looking for high-yielding shares, sparked by a sharp dive in the Australian dollar.
Overnight, the Australian currency hit a six-year low against the British pound and fell to a six-week low against the US dollar.
The weakness in the currency was sparked by Thursday’s surprisingly disappointing business investment figures, and comments from former US Federal Reserve chair Ben Bernanke that the Reserve Bank of Australia may be forced to cut rates to push down the stubbornly high dollar.
CMC Markets analyst Michael McCarthy said international investors were on the hunt for yield, with the strongest stocks and sectors today being the ones offering high returns.
“With the Australian dollar falling, from an international point of view they’re cheap,” he said.
But Mr McCarthy pointed out that with commodity prices beginning to steady, the dollar may not have much further to fall.
