Strength in dividend plays helped the ASX defy a soft night on Wall Street and a mixed morning in Asia after Japanese business sentiment soured but Chinese manufacturing accelerated.
At lunchtime the ASX 200 was seven points or 0.2% ahead at 4590 as gains in financials +0.2%, telecoms +0.1% and property trusts +0.5% offset weakness in resources, industrials and health stocks.
"I think people are stating to get more confident about transitioning their savings out of cash, where they are getting probably almost 3% now, and putting into stocks like Woolworths, Wesfarmers, the banks and Telstra," RBS Morgans client adviser Bruce Smith told Fairfax. "It's that sentiment of continuing to chase yield and feeling more and more comfortable about having funds invested in those sorts of companies."
Asian markets were mixed as economic data pointed to weakness in Japan and a recovery in China. Japan's Nikkei dropped 0.31% after the quarterly Tankan manufacturing index came in worst than expected. The index fell for a fifth straight quarter to -12 this month from -3 in the September quarter. The median estimate from economists was -10.
Shanghai rallied 1.21% after HSBC's preliminary manufacturing index for December continued the improvements seen in recent months. The flash manufacturing PMI advanced to 50.9 this month from 50.5 in November, just ahead of expectations. Hong Kong's Hang Seng added 0.29%. Dow futures were recently up 13 points or 0.1%.
A meeting this morning between President Barack Obama and Republican House Speaker John Boehner produced no public breakthrough in budget negotiations. A spokesman for Boehner said the 50-minute meeting was "frank". Read more here.
Crude oil futures rallied 14 cents this morning to US$86.36 a barrel. Spot gold was 30 cents weaker at US$1,698.10 an ounce but well off the morning lows. The dollar was buying $US1.0524.
A better day than expected, but there wasn't much to set the pulse racing. The XJO has been in a holding pattern for three sessions now and that's not a prescription for wild profits. The story of my morning was missed half-chances and general frustration, at least until ACR provided some volatility - got hit twice in the low 2.70s. Sold half, still holding the rest. Took AAC too early and got AVQ on pullback. The list of misses is longer: LNC, MAH, FXJ, CTP and BRU all offered opportunities.
