Market ends on a strong note as Wall Street finally comes good

A significant bounce on Wall Street on Thursday night also boosted market sentiment as the S&P/ASX 200 rose 28 points to close at 2924.6 and the All Ordinaries 27.5 points to 2883.

Over the week, the S&P/ASX 200 lost 67 points and the All Ordinaries 61.4 as global indices hit multi-year lows.

On Thursday, Wall Street's Dow Jones rose 247.7 points to 7534 and the S&P 500 index climbed 27.2 to 803.9.Heavy selling in domestic banks was the focus of attention locally as investors switched funds into global banks and growth stocks, which were relatively cheaper.

``They are just too expensive on a global basis. Offshore investors don't see the value," a dealer said.

NAB fell $2.23 over the week to $31.60, up 20c on the day, after it confirmed its offer for Britain's Abbey National had been rejected. ANZ, down $1.15 to $16.99 over the week, was up 6c on the day while CBA posted a weekly fall of $1.83 to $28.42, up 38c on the day. Westpac fell 92c to $13.07 over the week, down 3c on the day.

A dealer said institutional investors did not support NAB's offshore acquisition strategy and believed the bank should make a bid for a domestic institution such as AMP where it had comparative advantage.

``Their offshore track record is terrible," a dealer said pointing to the disastrous HomeSide investment in the US.

News Corp dominated trading yesterday as more than 15 million shares changed hands. The ordinary shares fell 7c to $9.17 over the week, despite Friday's 41c gain, while its preferred shares fell 13c over the week to $7.71, up 28c on the day.

Salomon Smith Barney's director of trading, Charlie Aitken, said the huge volume of News shares traded indicated the tide might have finally turned for the media stock.

``I think News Corp has bottomed and the first quarter result, which comes up in early November, may contain an earnings surprise due to the strength of the US TV advertising markets," Mr Aitken said.

``I think the market is using the banks as the funding vehicle to buy News Corp."

The strength of the S&P/ASX 200 against weakening global markets raised questions over whether the domestic market was overpriced.

ABN Amro strategist Douglas Orr said from an ``absolute perspective" the US and Australian markets were equally valued.

``On a forward price/earnings basis the US and Australian markets are on the same valuation, about 14.6 times," he said.

Mr Orr said the US had greater exposure to the tech bubble than Australia, which could explain the relative strength of our market.

``We haven't fallen nearly as much as the US has in the last 2.5 years because techs were 40 per cent of the US market and only 1 per cent of ours. We didn't benefit on the way up or suffer on the way down to the same extent."

A dealer said the local market was not overvalued and pointed to positive economic factors which would continue to give the domestic market an ``edge" over global markets. ``Our economy is in quite good shape, prospects for good earnings are good and we are not as dependent on trade to give us growth," the dealer said.

MONEY
$A/US?          54.75   -0.02
TWI             51.5    +0.1
90-day bank bills       4.880   -0.020
3-year bonds    5.015   +0.050
10-year bonds   5.515   +0.070

YESTERDAY'S MOVES
Rises 577        Falls 461 Steady 298
Dec SPI                 2937.0   +33.0
ASX 200                 2924.6  +28.0
Biz.com Tech    826.2   +6.7
Industrials     3424.8  +44.1
Energy          3993.1  -45.5
 Volume Value   548.5m  2.103bn