Shares advanced for a fifth day to a new nine-month high this morning despite a warning that recent floods may knock nearly 2% off GDP this quarter.
At lunchtime the ASX 200 was ahead 14 points or 0.3% at 4882 after earlier touching 4891, the index's highest level since late April last year. The big banks were the main driver after NAB delivered a first-quarter earnings report at the top end of expectations. Defensive sectors and small caps were among the drags on the market.
Retailers continued to be sold off following Myer's profit downgrade yesterday, dragging the consumer discretionary sector down 1%.
Business confidence picked up last month but business conditions collapsed to GFC levels as floodwaters rolled through Queensland and Victoria. NAB's monthly survey showed business confidence rebounded to +4 in January from -3 the previous month but business conditions slumped from +6 to -6. The rapid downturn threatens to knock as much as 1.8% off GDP this quarter, according to the survey.
However, Citi chief economist Paul Brennan told Fairfax the survey's predicted hit to GDP was excessive: "To get [that] fall in GDP, you'd have to have a massive fall in exports. You have an initial impact but it tends to go away as the floods recede. So over the space of a quarter there shouldn't be a large impact, provided there's not another disruption."
Asian markets advanced this morning. Japan's Nikkei was up 0.33% and Hong Kong's Hang Seng up 0.25%. Shanghai was closed for the Lunar New Year holiday but re-opens tomorrow. Dow futures were recently at -2.
Crude oil futures recovered 25 cents this morning to $87.58 a barrel. Spot gold was $1.20 weaker at $1,349.80 an ounce. The dollar was buying US $1.0128.
Looking good for a fifth winning close. Been a very easy market to trade since early November. Had a regulation morning's bounce-scalping here, with profits taken in EXR, MMW and GBG.
