Sharemarket Defies The Bad News To Rise Sharply

The Age

Thursday April 3, 2008

Vanessa Burrow, Markets Reporter

APPALLING news failed to quash market sentiment and the sharemarket rose strongly, even though some of the world's biggest banks are still losing billions.

The S&P/ASX 200 Index rose 2.6% to 5502.9 points, apparently on the feeling that the worst must be over.

Macquarie Group received a huge boost, rising almost 10%, or more than $5 a share, to $57.02. And Westpac, St George, Suncorp-Metway, Commonwealth Bank and ANZ all added more than 5% to their value.

Overseas, Swiss investment bank UBS had to write off about $US19 billion ($A21 billion) and its chairman resigned, but the bank's shares rose after it said it had plans to raise about $15 billion in capital. Deutsche Bank was forced to write off about $US4 billion, but its shares too were on the up. Lehman Brothers said it had raised $US4 billion because of strong demand for stock.

Goldman Sachs JBWere institutional sales trader Richard Coppleson likened the rise and fall of financial stocks to a boxing match. "The first three rounds the financial boxer was smashed up . . . many thought he was finished and it was all over," he wrote in his afternoon report.

"But he picked himself up and has fought back from the brink. He may have lost sight in one eye, his face is no pretty picture and his legs look like jelly - but he still got back on his feet."

Taking the analogy further, Mr Coppleson said the boxer had had adrenaline injections, by way of capital injections, and had a new lease of life. "He knows his opponent can no longer knock him down," he wrote.

Renewed optimism boosted the dollar, which last night was buying more than US91? after a sharp fall to US90.31?.

Gold was fetching almost $US890 an ounce, having risen slightly after three days of rapid declines.

© 2008 The Age

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