Strengthening US futures this morning helped Australian shares rally for a fourth morning as regional markets traded sideways following a flurry of manufacturing reports.
At lunchtime the ASX 200 was ahead 25 points or 0.5% at 4863 after earlier touching its highest level in nearly six weeks. All sectors were trading higher, bar telecoms and consumer discretionary stocks. Energy stocks saw one of the biggest rises, up 1% following a jump in the price of oil overnight. Consumer staples rallied 1.2%.
"At the moment we're getting dragged higher by the momentum we're seeing in the US economy," IG Markets analyst Ben Potter told Fairfax. "We could be at the risk of some profit-taking today as people look ahead to tonight's session but that doesn't seem to be the case at the moment."
Asian markets were mixed after the release of manufacturing reports in Japan and China this morning. Japan's Nikkei shed initial gains to recently trade 0.15% lower. Shanghai rallied 0.24% and Hong Kong's Hang Seng was up 0.08%. Dow futures were recently at a mildly bullish +27 ahead of tonight's monthly jobs report.
Japan's quarterly "tankan" manufacturing report showed business sentiment improving ahead of the March 11 earthquake and tsunami. Business sentiment ticked up from 5 in the December quarter to 6 this quarter, however, the Bank of Japan will issue a supplementary report on Monday to include reactions to the natural disasters.
Chinese manufacturing activity increased last month but not as much as expected, according to an official government report released this morning. The official manufacturing purchasing managers index rose to 53.4 last month from 52.2 in February, below economists' consensus prediction of 54.
Australian manufacturing contracted last month as the strong dollar crimped demand. The AiG/PWC Performance of Manufacturing Index dropped 3.2 points to 47.9, below the 50-point mark that marks expansion from contraction in activity. The dollar hit a new post-float high of 103.73 US cents overnight and was recently trading at US $1.0329.
Crude oil continued its overnight bull run this morning, charging another 58 cents to US $107.21 a barrel. Spot gold was trading at US $1,430.60 an ounce.
A more bullish morning than I expected - overseas buyers chasing commodity leverage and exposure to the rising Aussie dollar? Also more talk about BHP snagging WPL. The market doesn't seem particularly moved by the Asian manufacturing reports. Been another good week for investors, but harder work for traders, thanks to indifferent volume and volatility. A subsistence-wage week for me. Just one trade this morning - AZZ from the low.
