The sharemarket rebounded yesterday after US stocks rose due to better-than-expected economic data, suggesting optimism over the global economy is stronger than political concerns in Spain and Italy.
The benchmark S&P/ASX 200 closed up 0.8 per cent at 4921 after falling 0.5 per cent on Tuesday, its biggest decline in four weeks.
Investors were concerned earlier this week by a financial scandal at Banca Monte dei Paschi di Siena, Italy's third-largest bank by assets, as well as growing support for former prime minister Silvio Berlusconi, who has vowed to reduce taxes if his coalition wins elections this month. Also, Spain was bracing for possible fallout from allegations of secret cash payments to Prime Minister Mariano Rajoy and other leaders of his party.
However, in a show of confidence, the US S&P 500 rose 1 per cent after the Institute of Supply Management's services-sector index exceeded market expectations, PC-maker Dell approved the world's biggest leveraged buyout since the start of the global financial crisis, and Italian 10-year bond yields fell 10 basis points.