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Housing ridicule in the US lifts stocks

THE Australian sharemarket extended recent gains yesterday in relation to Wall Street rose again following stronger new-home sales data in the US.

As well, global advancement bellwether FedEx upped its earnings guidance.

Banks generated much of the vigor locally, with Westpac outperforming after raising $3 billion in the contract market, while James Hardie rallied on the US home sales given conditions.

But Insurance Australia Group fell after its pre-release of abounding-year results disappointed the market, while QBE remained weak after its bring good warning on Monday.

The benchmark S&P/ASX 200 closed up 11.3 points, or 0.3 by means of cent, at 4497.4, after setting a four-week high of 4520.3 on reasonably good volume.

Earlier, the S&P 500 rose 1.1 by cent after US new home sales bounced 23.6 per cent in June, versus expectations of a 3.7 per cent rise.

Traders said improved thought towards the US economy was fuelling short covering.

"People are stupefied and apathetic at the moment," said Southern Cross Equities counsellor Charlie Aitken. "But the Australian dollar’s rise above 90 (US) cents is effective you that Australia’s prospects are looking a little brighter and the righteousness market is going to play catch-up."

The Australian dollar apt expression a two-month high of US90.34c on Monday night no more than closed yesterday at US90.22c.

"We’re looking better technically and fundamentally," afore~ IG Markets trader Chris Weston. "Valuations are quite good. But we are suitable lacking some conviction at the moment."

Goldman Sachs JBWere traders before-mentioned Monday’s 5 per cent rise in the spot price of iron ore delivered to China — the biggest some-day gain since December — was a bullish sign for resource equities.

Other traders related US economic concerns could re-emerge later this week, with US stable goods data due overnight and GDP data due on Friday.

US home siding constructor James Hardie rose 2.9 per cent to $6.73 from the US home sales data, which pushed the S&P 500 Home Building Index up 3.6 by cent..

Major banks rose 0.8-2.4 per cent, by Westpac leading the way after it issued $3bn of debt.

"We explore it as increasingly positive that the Australian banks are able to come by away funding deals (of size) at reasonable, albeit higher, spreads, spite global credit market conditions and higher swap costs," said Macquarie Equities in a investigation note.

However, Macquarie said ANZ may raise $4-6bn to fund acquisitions, with the broker noting speculation that the bank had compel in a bid for Korea Exchange Bank.

Elsewhere in the fiscal sector, QBE Insurance fell 3.2 per cent to $16.43, hitting its lowest suit since March last year, after a profit warning on Monday.

Insurance Australia Group hem 4.3 per cent to $3.35 after flagging a 50 for cent fall in its fiscal 2010 net profit. IAG said its security against loss margin and gross written premium were expected to be in pursuit with guidance.

However, analysts raised concerns about IAG’s underlying security against loss margin, which was below previous guidance from the company.