Shares jump again, US govt cuts interest rates, Aussie dollar rebounds: Economy roundup

Yesterday morning’s big rally on Australia’s sharemarket might have run out of steam towards the end of the trading day, but investors are clearly still in a cheerful mood, with shares jumping 2.4% in early trade.

Yesterday morning’s big rally on Australia’s sharemarket might have run out of steam towards the end of the trading day, but investors are clearly still in a cheerful mood, with shares jumping 2.4% in early trade.

Investors were clearly buoyed by the US Federal Reserve’s decision to cut rates by 50 basis points, bringing the official interest rate to 1%. By 12:10pm AEST, the benchmark S&P/ASX200 index was up 107.2.points, or 2.8% to 3952.8.

The big winners were Rio Tinto, which jumped 5.18% to $74.45, and fellow mining giant BHP Billiton, which gained 4.14% to hit $27.39.

Westpac, riding on its announcement of a 6% increase in cash earnings to $3.726 billion, jumped 0.54% to $20.37. St George gained 2.35% to $26.92, still enjoying the benefits of yesterday’s announcement of a 13.9% profit increase to $1.321 billion.

The Aussie dollar has also continued to gain ground, rising a bit over 1% this morning to US67.53c. The dollar has rebounded by around 12% since the start of the week.

Overseas, the US Federal Reserve’s rate cut decision helped oil prices jump 9%, or $US5.18 to finish the day at $US65.47 a barrel.

Wall Street, which priced in the rate cut yesterday with its 11% jump, finished on a disappointing note, with the Dow Jones Industrial Average falling 74.16 points or 0.8% to close at 8990.96. The market’s mood wasn’t helped by GE’s announcement that 2009 profits will be around the same level as 2008.

But European markets fared better, with the FTSEurofirst 300 index up 7.51% to close at 897.06. The rally was led by banks and commodity stocks.

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