Australian shares outlook - Higher as confidence returns

Australian shares outlook - Higher as confidence returns

	Published : Tue, 14 Aug 2007 00:14 By : Agencies Print this Story

SYDNEY (Thomson Financial) - Australian shares are likely to open higher on Tuesday as investor confidence is slowly restored after

the Reserve Bank of Australia presented a hawkish view of the economy as well as signs that global

financial markets are stabilizing after large injections of cash from central banks.

Stuart Smith, private client advisor at Bell Potter Securities, said the market is set for another leg up following Monday's gains based on market fundamentals though caution is needed.

'Investors with a considered risk profile should wait for a break on the upside of our market while those with less of a concern for timing and are confident about the strength of the Australian economy

should buy on dips,' Smith said.

The market is likely to be led by miners after base metal prices posted firm gains on the London Metals Exchange Monday.

The S&P/ASX 200 September futures contract ended its overnight session up 40.0 points at 6,037.0, suggesting a strong start to trading.

On Monday, the S&P/ASX 200 closed up 75.6 points or 1.3 percent at 6,011.6 and the All Ordinaries

Index rose 62.3 points or 1.0 percent to 6,027.5.

In New York, stocks gave up moderate gains in late trading and closed marginally lower Monday after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness.

The Dow Jones Industrial Average closed down 3.01 points at 13,236.53. News Corp shares ended up 1.3 percent.

In London, leading shares were sharply higher at the close with miners fuelling gains in blue chips,

while Wall Street gained in late trade after the Fed eased some credit concerns.

The FTSE 100 index soared 180.7 points or 3 percent to 6,219.0, its best rally in four years.

BHP Billiton rose 6.9 percent and Rio Tinto surged 7.1 percent.

Crude oil prices ended Monday's session little changed as continued injections of liquidity by central banks calmed market jitters, in turn easing fears of reduced global oil demand. The September Nymex crude oil contract rose 13 cents to 71.60 US dollars per barrel on the New York Mercantile Exchange.

Base metal prices advanced as investors concluded that the recent volatility on financial markets would not significantly affect global economic growth. Lead and nickel rose by 3.0 percent.

Gold prices were little changed as a stronger US dollar counterbalanced the continued safe haven flows by investors. The most-active December gold contract fell 70 cents to 680.90 dollars an ounce on the New York Mercantile Exchange.

Ahead, National Australia Bank will release its monthly business survey while Leighton Holdings

and Cochlear will report their full-year earnings.

(1 US dollar = 1.19 Australian dollars)

bruce.hextall@thomson.com

bhx/ms

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