Australia Leads!

Is it a red herring or is Australia showing us the way out of global recession?

When the Reserve Bank of Australia’s raised interest rates yesterday, it created a tsunami of sorts with a rally on commodity prices and strong gains in European and North American share markets indicating a positive sign for the global economy.

The RBA lifted rates by 25 basis points to 3.25 per cent.

The Australian stockmarket jumped in early trading today (7 Oct)amid growing confidence about the global economic recovery.

The resources sector was leading the bourse higher after gold bullion shot up to a record $US1045 an ounce in New York. Banking stocks were also stronger.

US stocks leapt higher at the opening bell overnight after a surprise interest-rate increase by the RBA drove a pullback in the US dollar.

The Australian dollar peaked at US89.20 cents in New York, its highest level in nearly 14 months, and in domestic trade this morning was at US89c.

ABN Amro Morgans adviser, Lisa Jarvis, said Australian stocks, currency and bonds were hot property at the moment.

“Money from America is trying to find a home in Australia,'' she said.

“Our currency is stronger than the US. The US dollar is losing ground each day.

“Everyone is looking for appreciating assets... and we have the highest interest rates now. Asian markets will play it, too.”

On Wall Street, the the Dow Jones Industrial Average closed up 131.50 points, or 1.37 per cent, at 9731.25. In two sessions, the Dow has jumped 243.58, or 2.57 per cent, marking its largest two-day gain since the two days ended July 16.

So those who invested in the Aussie dollar is laughing all the way to the bank, this time so much louder, I am sure!