A BRIGHTER end to what was a torrid week for mining stocks helped carry the sharemarket to a modest 0.2 per cent gain yesterday.
After making a bold start, the benchmark S&P/ASX 200 index drifted lower throughout the trading session, only to stage a small late recovery and end 9.2 points higher at 4931.9.
Mining heavyweights BHP Billiton and Rio Tinto clawed back some of their losses throughout the week, rising 2.5 per cent and 4.3 per cent respectively, after a floor emerged under key commodity prices hammered since Monday's gloomy Chinese economic data.
Their gains, blunting steeper weekly falls, were offset by weakness in financial stocks rattled by poor global bond trading results at Morgan Stanley.
The big four banks, which have a combined market value of $360 billion, are coming under increased scrutiny from analysts concerned their soaring valuations compared to global peers are not justified in a fading mining boom.
Commonwealth Bank and Westpac have both individually surpassed BHP's market capitalisation on the Australian Securities Exchange, despite its status as the world's biggest mining company.
Westpac closed down 2 per cent, ANZ lost 2 per cent and National Australia Bank fell 1.7 per cent. Commonwealth Bank performed better with a more modest 0.3 per cent fall. Traders remained cautiously optimistic on the outlook for the broader market, which is still up 20 per cent since June 30 despite rounding out the current week with a 1.6 per cent decline.
Tony Russell, a senior equities adviser at RBS Morgans in Brisbane, said he was encouraged by yesterday's gains in light of the negative lead from Wall Street. "But when we're seeing this sort of volatility, it doesn't just dissipate overnight," he said.
The dollar was sideswiped in early trading after the International Monetary Fund warned it was about 10 per cent overvalued, but recovered to close the Asian session up US0.26c at $US1.0343.
Other resources stocks performed well, with Fortescue Metals up 9.9 per cent. The energy sector was also stronger after a jump in oil prices indicated some stability was returning to energy markets, although the gain could partly be attributed to a pipeline disruption in Nigeria.
Woodside rose 0.7 per cent, while Santos added 2.4 per cent despite reporting a 5 per cent fall in first-quarter revenue that it blamed on project outages.
Goldminer Newcrest rose 4.8 per cent after what has still been a horror week for producers of the precious metal. Despite yesterday's gain, Newcrest ended the week 15 per cent weaker.
"There has certainly been no shortage of drama in commodity markets this week," said Tim Waterer, a senior trader at CMC markets in Sydney.
"And while so far the size of the recovery pales by comparison to the steepness of the fall, at least there are signs of price stabilisation taking place."
