Shares are lower for a second day after a rally in Asia faded following the release of Chinese economic data that topped estimates and raised the odds on interest rate rises.
At lunchtime the ASX 200 was off 14 points or 0.3% at 4870, with industrials and the big miners once again accounting for much of the weakness. Gold stocks bounced 1.4% as gold futures hit a new record in Asian trade. Spot gold neared the US $1,480 mark this morning before fading to trade recently at US $1,474.60 an ounce. Property trusts, telecoms and consumer staples were also higher.
China's monthly economic update showed the economy expanding faster than economists expected, with inflation running well above the government's stated target range. GDP expanded at a rate of 9.7% last quarter, ahead of the 9.5% expected, and inflation increased to 5.4% last month, against expectations for a rate of 5.2%. Retail sales also topped analyst projections.
Chinese shares initially rallied on the news but gave back the gains in the last hour. The Shanghai Composite was recently off 0.12%. Japan's Nikkei was down 0.43% and Hong Kong's Hang Seng up 0.66%. Dow futures were recently at +2.
The dollar continued to trade above US $1.05 following further overnight falls in the value of the greenback. The dollar was recently buying US $1.0524.
"The rally in the Aussie is not so much a function of inherent strength in Australia, rather how investors feel about US dollars," GFT Forex director of currency research Kathy Lien told Fairfax. "[Last night] in the US, we had weaker than expected economic data and relatively dovish comments from the Federal Reserve, which reminded investors of the reasons why the do not want to own US dollars."
Crude oil futures eased 10 cents this morning to $108.32 a barrel.
Volatile action in China: down before the monthly update, up immediately after, then straight back down again. It's one of those tricky situations where good news is seen as bad news because it points to more interest rate rises. Been a morning of very modest achievement here. A lousy part-fill in TIS meant I still lost money selling higher. Scalped a minor bounce in CWN and am a couple of points up on MRM from the low. Recently added AIO and IPL for any recovery this arvo.
