The share market has posted its strongest day in 20 months as the global economic outlook improves and interest rates remained on hold.
Shares gained about $39 billion in value on Tuesday, in the largest one-day rise for the ASX200 index since October 6, 2011.
CMC Markets chief strategist Michael McCarthy said the market had regained all of Monday’s losses, which was caused by worries about manufacturing in the world’s major economies.
But data from the US and Europe overnight painted a more optimistic picture.
“It’s been a big bounce back from yesterday’s pre-emptive sell off,” he said.
“There’s a better growth outlook for the globe and a better outlook from the Reserve Bank.
“The global outlook has improved, regardless of what happens in China, and given we’re pricing a worst case scenario in China any pullback should lead to rallies in resource stocks.”
The market added to its early gains when the Reserve Bank of Australia (RBA) left the cash rate steady, but said it still had scope for further rate cuts.
Stronger commodity prices also boosted sentiment, and led to market-leading gains being posted by mining and energy stocks.
BHP Billiton shares added $1.13 to $32.07, Rio Tinto was up $1.34 to $53.07, Fortescue Metals added 17 cents to $3.12 and Newcrest Mining shares gained 68 cents to $10.68.
Santos gained 57 cents at $12.87 and Woodside added $1.07 cents to $35.82.
The banks also posted gains, but not as large as the resources stocks.
ANZ gained 66 cents to $28.48, Commonwealth Bank added $1.37 to $68.90, Westpac rose by 45 cents to $28.42 and National Australia Bank put on 29 cents to 29.26.
Brambles shares closed 27 cents higher at $9.35 after the company announced it would demerge its data management business Recall.
KEY FACTS
* At the close, the benchmark S&P/ASX200 index was up 123.7 points, or 2.63 per cent, at 4,834.
* The broader All Ordinaries index was up 120.6 points, or 2.57 per cent, at 4,810.3.
* The September share price index futures contract was 105 points higher at 4,793 with 30,087 contracts traded.
* National turnover was 1.5 billion securities worth $4.9 billion.
