The Australian share market opened more than one per cent higher after a rally on European and US markets, as investors clung to positive comments from French and German leaders about the eurozone debt crisis.
The local bourse bounced back from Wednesday, when it closed more than one per cent lower on reports that ratings agency Moody’s was downgrading the credit rating of a number of European banks because of their exposure to a possible Greek default.
At 1038 AEST, the benchmark S&P/ASX200 index was up 86.2 points, or 2.15 per cent, at 4,092 while the broader All Ordinaries index rose 80 points, or 1.96 per cent, to 4,170.4.
CMC Markets head of analysis David Land expected the local market to recover some of Wednesday’s losses, as global investors priced in a wide range of political and economic rhetoric about potential rescue packages into the market.
US stock markets closed with strong gains on Wednesday, amid signs that European leaders might be coming together to tackle the continent’s debt crisis.
The Dow Jones Industrial Average jumped 1.27 per cent to close at 11,246.73.
The broader S&P 500 climbed 1.35 per cent to 1,188.68, while the tech-heavy Nasdaq Composite rallied 1.60 per cent to 2,572.55.
Talks between the leaders of Germany, France and debt-ridden Greece, as well as comments by European Commission head Jose Manuel Barroso about the need for unified “eurobonds,” helped lift the markets to a strong finish.
Mr Land said investors were taking short term opportunities from a volatile environment, and were torn between such comments that indicated stability in the Eurozone, and the expectation that a Greek default was imminent and inevitable.
“The outcomes people have got to try to price in are so many and varied and at the same time what I suggest is an overreaction to speculative newsflow,” he said.
“(Investors) are looking to drive short term positives with rhetoric whilst not considering long term structural problems that lie ahead.”
Financials and materials led the market, opening up 1.9 per cent and 1.7 per cent respectively, with gains across all sectors.
The best performing stock on the S&P/ASX100 index was managed investment fund Perpetual, which was up 90 cents, or 4.2 per cent, at $22.42.
On the ASX 24, the September share price index (SPI) futures contract rose 82 points to 4,099 points, with 15,178 contracts traded.
Turnover was 324.88 million shares changing hands for $1.35 billion, with about nine out of every ten stocks rising.
