Despite a choppy start to the week, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) now looks set to end the week in the black thanks to a strong gain today. The benchmark index is up 1% at 5281 points, adding to yesterday's 0.6% gain.
It seems that decent earnings results from companies on Wall Street overnight have added some fuel to the fire while investors may also be starting to believe that the recent selloff has been overdone. Indeed, commodity prices have held up reasonably well while the US Federal Reserve appears more willing to remain patient on an inevitable interest rate hike, easing the market's concerns.
The major banks did most of the heavy lifting in today's session. Although Westpac Banking Corp (ASX: WBC) remains in a trading halt due to its capital raising, Commonwealth Bank of Australia (ASX: CBA) rose 2.1%, while Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) jumped 1% and 1.6% respectively.
Meanwhile, Fortescue Metals Group Limited (ASX: FMG) lifted another 5.5%, taking its shares to $2.42 due to ongoing stability in the iron ore price, with Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) also gaining 0.6% each.
Is it time to buy?
Despite its recovery over the last fortnight, the local sharemarket is still somewhat volatile which is enough to deter some investors from buying shares.
However, now could actually be an excellent time to start buying some beaten-down companies, many of which I believe have become somewhat under-priced. I believe the market is beginning to recognise this which could help explain today's gain.