The condition of the ASX’s walking wounded improved yesterday as the wider market jumped by just on 100 points, or nearly 2% as investors stoically ignored a big fall in iron ore prices and falls in other commodity prices.
Metcash (MTS), Dick Smith (DSH) and Slater & Gordon (SGH) shares all staged solid rebound yesterday – ‘bargain hunting’ (those mythical cheapskates) were blamed for the sharp and probably silly rise, but in the case of the walking wounded, a fair bit of short covering seemed in evidence.
Dick Smith shares rose by a quarter yesterday, closing at 35 cents after Monday’s 57% slide.
That was despite media reports the struggling electronics retailer is preparing to kick off deeply discounted sale to clear $60 million or more of excess stock, potentially prompting rivals to follow suit. Some reports said the sale could start as early as this Saturday.
Rival JB Hi-Fi lost ground following the likelihood of a price war among electrical retailers, falling 1.8% to $18.95, but Harvey Norman shares rose 1.7% to $4.15 as its investors ignored the reports.
Slater and Gordon shares were virtually wiped out last week after legislative changes in the UK that affected compensation payouts to road accident victims, also bounced back for a second day, rising 28.1% to $1.18. That was after Monday’s 34% bounce.
And shares in Metcash was another of yesterday’s strong performers, rising 13.5% to $1.68. That was on top of Monday’s 12% rise.
In all cases there is a big hint of short sellers (hedge funds and other speculators covering their positions to crystalise some of their profits.
