Gains in the big banks and defensive stocks helped the share market overcame mixed economic data, falls in the big miners and several profit warnings this morning.
At lunchtime the ASX 200 was ahead for the first session in three, rising 21 points or 0.4% to 5514. Property trusts +0.8%, telecoms +0.8%, health +0.8% and financials +0.6% accounted for much of the strength. The metals & mining sector was down 0.9% but well off its low as BHP recovered from a two-month low and Rio Tinto bounced off its weakest open since last August. The confession season continued with profit downgrades from Ausdrill, McAleese, Funtastic, RCG Corporation and Western Desert Resources.
A slew of economic data gave the Reserve Bank plenty to think about at tomorrow's policy meeting. House prices dropped for the first time in a year. The RP Data-Rismark home value index for capital cities declined by 1.9% last month.
Building approvals swooned 5.6% during April as the threat of a tough federal budget weighed on demand. Economists had predicted approvals would increase 2%.
Company operating profits rose more than expected over the first three months of the year. Profits rose 3.1%, versus expectations of 2.5%.
An improvement in new orders and production helped a measure of manufacturing activity rise last month. The AiG performance of manufacturing index lifted 4.4 points to 49.2 points, just short of the level that indicates expanding activity. New orders jumped 13.3 points to 55.1 points. Production rose 9 points to 51.6 points.
Japan's Nikkei rallied 1.84%, partly in response to weekend news that Chinese manufacturing activity hit a five-month high last month. Trade on China's Shanghai Composite and Hong Kong's Hang Seng was suspended for a public holiday. Dow futures were recently up 23 points or more than 0.1%.
Crude oil futures rallied 44 cents this morning to US$103.15 a barrel. Spot gold was $3.50 weaker at US$1,247.80 an ounce. The dollar was buying 92.67 US cents.
Looks like the weekend Chinese news is encouraging buying of risk assets - oil, US futures, Japanese equities up, gold down. Bravo if you can make any sense of that domestic economic data dump. Companies seemed to do just fine through to March, but the federal budget began to hit the housing market shortly after. Not sure why manufacturing should do as well as it did other than the fact it has been in the doldrums for so long that the only way is up. Hindsight says Rio and BHP were good buys this morning. I managed just one trade - a quick in-out when KAR bounced for the first-time.
