Shares rise after Glencore assurance
The Australian share market is higher after US stocks mainly rose overnight and mining giant Glencore allayed insolvency fears.
Around $60 billion in value was wiped from the local share market on Tuesday with the major indices dropping below 5,000 points.
CMC Markets chief market analyst Michael McCarthy said global growth fears triggered by speculation mining and trading giant Glencore may become insolvent caused the massive sell-off.
But he said Glencore vigorously defended its solvency overnight, assuring investors that it is operationally and financially robust.
This, combined with a solid US session overnight led to a rally in the company’s shares and a lift in overall confidence, he said.
“During the overnight sessions in Europe and the US, investors and traders emphatically rejected the drivers of yesterday’s sell-off in the Asia Pacific region,” he said.
“Glencore was at the centre – linked to concerns about global growth and the impact on commodity prices.
“While these are not unreasonable fears, there was a bit of panic selling yesterday and I think the statements from Glencore overnight have helped ease those concerns.”
US stocks also rose after the US consumer confidence index rose to 103.0, beating expectations for a sharp drop.
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The Dow and S&P 500 finished higher but the tech-rich Nasdaq fell for the sixth straight day.
On the local bourse at 1030 AEST, mining giant BHP was up 27 cents at $21.88, while rival Rio Tinto gained $1.09 to $47.61 and Fortescue Metals was up 1.75 cents at $1.05.
Among the big four banks, Commonwealth Bank added $1.88 to $72.03, Westpac gained 47 cents to $29.57, NAB was up 52 cents at $29.72 and ANZ lifted 51 cents to $26.89.
