The Australian share market is hovering at 5 year highs at lunchtime in the East on Thursday, following a spectacular night for US stocks which saw the Dow Jones Index close at a record high.
The U.S. equity markets, which appear to have traded in the sinuous see-sawing seen earlier this year for an uninterrupted climb this month, are about to fall off a cliff. At least that’s the opinion of several Wall Street portfolio strategists, who have been warning clients over the past few days that an overvalued stock market is about to be hit by various rally-killing disappointments and suggesting equities are in for a fire sale before the year is up.
Instead of tapering its monthly US$85 billion bond buying program as expected, the US Central Bank instead decided to maintain the status quo and gave a "dovish" outlook, delighting investors who welcomed the idea of cheap money and low interest rates.
Locally, we are seeing most sectors track higher. Mining players are leading the way after commodity prices rose overnight. BHP Billiton (BHP) shares are firmer by almost two per cent.
The financial players are firmer by 0.8 per cent while energy stocks are up 1.2 per cent on average.
We are seeing a bit of a switch out of stocks heavily exposed to the US, as the greenback fell and our dollar rose. CSL Limited (CSL) in the healthcare sector is down 0.7 per cent to $64.385 while Fox (FOX) is down one per cent to $34.54 and NewsCorp (NWS) is down 1.7 per cent to $18.12.
Surfwear retailer Billabong (BBG) has risen 6.7 per cent to 48c after accepting a new funding package from Centerbridge Partners LP and Oaktree Capital Management. The new deal will see Centerbridge and Oaktree own up to 40.8 per cent of BBG's stock.
So far on the market, a total of 1.1 billion shares have changed hands, worth 4.3 billion. 551 are up, 254 are down and 269 are unchanged.
The Australian dollar rallied to US95.3c this morning after the Fed kept its asset purchase program as is, sending the greenback lower.
At lunchtime in the East the AUD is buying US95.16c.
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