Australian sharemarkets are up for the third consecutive day, with the S&P/ASX200 lifting 3.1% to 5752.5 by 12.20pm.
A strong US lead – the Dow Jones Index closed up 0.8% to 12,378.61 overnight – and higher prices for metals such as copper and nickel and other commodities, are key reasons behind this morning’s positive activity.
A big reason for the ongoing market uncertainty is that nobody is really sure how far the effects of the sub-prime crisis extend, largely because the financial engineering associated with them is so complex that very few people fully understand.
The $8 billion fraud committed by a share trader working for giant French bank Societe General exemplifies the problem. The trader concealed his fraud through “a scheme of elaborate fictitious transactions” so tricky that his supervisors and the bank’s security measures were unable to detect them until too late.
Sunnier news came overnight for those economists who believe Australia will be insulated from a US recession because of our engagement with China.
China’s National Bureau of Statistics said the country’s economy has grown at more than 11% for the second year in a row, with the nation’s GDP for 2007 increasing by 11.4%. If there is a slowdown in the US that would affect China, but should still leave GDP growth at a relatively high 9%, market watchers say.