Resources lift markets despite Bernanke gloom

Australian sharemarkets have overcome a shaky start to lift steadily this morning, despite US Fed chairman Ben Bernanke finally mentioning the R word – recession – in comments overnight.

At 12.20 pm the S&P/ASX 200 is trading at 5576.0, up 1.3% on yesterday’s close and heading in the opposite direction to the Dow Jones Index, which last night dropped 0.38% to 12605.83.

US Federal Reserve Chairman Ben Bernanke told a US congressional committee overnight that “recession is possible,” although any dip is likely to be followed by a strong recovery.

“It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said.

But some strong commodities prices overnight were enough to push the S&P/ASX 200 higher today despite Bernanke’s comments. Australian markets have now moved in the opposite direction to the US on several occasions in recent weeks.

In Australian economic news today, the number of new vehicles sold in March was down 3.3% on the equivalent period last year, with 91,285 new sold.

And the Australian services sector lifted growth slightly in March, according to the Australian Industry Group – Commonwealth Bank Performance of Services Index.

A 0.6 point rise puts the PSI index at 53.8, just keeping its head above the 50 point line separating growth from contraction.

“The latest readings in the Australian PSI indicators show that consumer segments have softened more than business segments.  This is suggesting that consumers may finally be starting to wobble at the knees under the weight of multiple RBA interest rate hikes, high personal debt levels, ever rising petrol prices, and stock market weakness over the past six months or so,” Commonwealth Bank Senior Economist John Peters says.