The bounce began early in the session but was marred by choppy trading, perhaps as the Australian market digested more concerns coming out of the US about the widening circle of damage from the sub-prime mortgage debacle.
According to news reports, Wall Street reacted “uneasily” to Federal Reserve chairman Ben Bernanke’s comments that the housing sector in the US might get worse before it gets better and his suggestion that the US economy might be cooling.
However, the shaky lead from the US was balanced against firmer base metals on the London Metal Exchange overnight, with nickel up 2.34% to $US32,815 per tonne and copper up 0.7% to $7936/t. Tin also had another bullish day, putting on some 4.3% to $14,885/t.
In the end the bulls won out – just, with the SP/ASX 200 benchmark gaining almost 1% to 6384.2 points. BHP finished up 25c to $37.68, while Rio Tinto closed at $97.45, a gain of 45c.
Analysts weren’t overly thrilled by Rio’s quarterly performance yesterday with opinions ranging from ‘respectable’ to ‘so-so’, but the company seemed to escape too much of a backlash on the bourse.
Fortescue Metals Group also managed to wind back yesterday’s losses, gaining $1.05 to $39.30.
But despite the higher close for nickel and copper on the LME and the recovered overall market, many base metals focused plays suffered. Oxiana had a surprisingly lacklustre day down 2c to $3.87, while Zinifex shed 4c to $19.85.
Nickel plays Minara (down 22c to $6.92), Jubilee (down 19c to $16.22) and Mincor (unchanged at $4.16) seemed the miss the memo on both the price rise for nickel and the overall market lift.
Africa-focused copper miner Anvil Mining also shed 70c to $20.60, while zinc play Perilya shed 9c to $5.
Out of the mid-tiers Newcrest was one of the better performers, helped along by the rising gold price to end the day up a healthy 2.98% or 71c to $24.54.
The spot price of gold was boosted overnight to $673.8 an ounce by the falling US dollar and that nation’s economic concerns, plus rising oil prices.
Other gold plays that performed well included China-focused SinoGold, which rose 35c or more than 6% to $6.04 on the back of no news. Papua New Guinea-focused Lihir Gold ended the day up 6c to $3.13, while international miners AngloGold Ashanti and Newmont also had a good day, gaining 38c to $10.14 and 18c to $4.88 respectively.
Meanwhile the day’s biggest news, and biggest move, came from diamond miner Kimberley Diamond Company which shot up some 16c or 30% to $68.50 after it announced it had accepted a $A300 million takeover bid from London-based Gem Diamonds.
The news wasn’t so kind to Blina Diamonds – in which KDC holds a 40% stake – which fell 6c or almost 14% to 38c.
