Metal momentum

Published in the Daily Telegraph, April 2009 by Jenny Dillon

Rise in zinc, US profits keep stocks heading up

Higher prices for metals and impressive earnings results from two major US companies are expected to drive the Australian sharemarkets higher this morning.

Confidence will also be buoyed by the US market, which last week posted its sixth straight week of gains.

The price of zinc rose 4 per cent on the London Metals Exchange on Friday, pushing up other base metals.

Meanwhile across the pond, banking giant Citigroup reported a first quarter profit of $US1.6 billion (A2.2 billion) and General Electric impressed with a first quarter profit of $US2.9 billion ($4 billion). While falling 35 per cent, it was still a much better-than-expected result.

"Investors are becoming more positive about the prospects for the global economy," said CommSec chief economist Craig James.

"Our market could be up between 15 points and 20 points at the start of trade," he said.

But enthusiasm for the direction the market seems to be heading should be curbed, said Wealth Within chief analyst Dale Gillham.

"There is a concern right now withhow the market is unfolding, as it may result in larger falls when the market does turn, which will most likely hit many uneducated investors who may have just bought in thinking the bull market is underway," he said.

"Anyone suggesting that the bear market is over is in my opinion being premature. I still believe investors need to act with caution when buying stocks and to always use a stop loss to protect capital.''

The benchmark S&P/ASX200 index closed on Friday up one point or 0.03 per cent at 3776.7 points, while the All Ordinaries gained 2.5 points, or 0.07 per cent, to close at 3728.1.

The Dow Jones Industrial Average was up 5.90 points to 8131.33.

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