The sharemarket roared back to life today with its biggest rise in the past eight months as investors snapped up bargains after a three-day decline.
The benchmark S&P/ASX200 closed up 1.8 per cent at 5120.2 after hitting a seven-day low yesterday. The index was up 10 per cent for the year to date and 28 per cent since June 2012. Trading value was $6.7 billion - well above the 20-day average of $5.4bn.
A recovery was expected after the index fell 1.2 per cent yesterday and fewer-than-expected US jobless claims lifted the S&P500 to a 5 1/2 year high. However, analysts are baffled by the extent of the rise on the domestic bourse.
Today's rise demonstrated the extent of demand for Australian shares as money continued to flow out of low-yielding cash and bonds, they said.
"The strength indicates the market positioning," CMC Markets chief strategist Michael McCarthy said. "Once again people got nervous, investors lightened up on their positions and traders went short and the market has again kicked them in the pants."
Based on today's strength some predict fresh multi-year highs next week.
"It suggests the bull run is intact," IG strategist Evan Lucas said. "The fact that materials have really bucked the trend suggests the contrarians are buying."
CSL, Woolworths, Wesfarmers Woodside, Westpac, QBE, Macquarie and Brambles rose 2.5 per cent to 3.4 per cent.
Miners including BHP Billiton, Rio Tinto and Fortescue Metals rose 1.0 per cent to 2.3 per cent in spite of lower iron-ore prices. The spot fell 4.4 per cent to $US132.90 a tonne yesterday.
