Mirvac Group

Overnight US stocks slumped more than 5% as investors worried about the global financial crisis and a US recession, wiping out the gains from the Election Day rally as the problems facing US President-elect Barack Obama dimmed optimism on Wall Street.

Overnight Wall Street closed with a 2.1 per cent gain, qualifying it as one of the quietest sessions in October. As the recent Australian share market has never made consecutive gains more than two days, analysts speculate a flat market today. Investors may take the breather as they did and wait until the expected RBA rate cut next Tuesday to move back into the market.

Yesterday the Australia share market surged more than 4% after the US government announced the $US700 billion ($840 billion) Wall Street bailout over the weekend, and the ban on short selling locally. Short-selling targets Macquarie Group(ASX:MQG) and Babcock and Brown(ASX:BNB) bounced strongly as market participants sought to unwind short positions and bought up stock.

The Australian share market opened higher today led by the financial sector and despite disappointing US economic growth data. US equities slumped on readings on jobs and manufacturing which indicated that businesses and workers still face a tough economy.

Australian shares closed firmly in the black yesterday for the second consecutive day, driven by a positive US lead and higher prices overnight for copper, nickel and oil. DJ Carmichael research assistant Peter Kopetz said investors remained cautious and would continue to looking for more signs of positivity from company earning reports during the latter part of the profit reporting season in August. More big swings in the US are expected as their profit reporting season continues.

Yesterday, the Australian share market was 3.5 per cent higher to post its biggest single-day rise in almost four months as bargain hunters snapped up banks, property trusts and miners.