Australian shares are within reach of their strongest close in five months as regional markets chase overnight surges in US and European equities.
At lunchtime the ASX 200 was ahead 51 points or 1.2% at 4341 with all sectors trading ahead. The index hasn't closed higher than 4343 since early November. Mining stocks led the rally despite BHP reporting a cyclone-affected 8% plunge in iron ore production over the last three months. BHP shares rallied nearly 2%, helping the metals & mining sector put on 1.9%.
However, trading volumes remained well below long-term averages. "The biggest issue is we're not seeing engagement in any material way," Justin Gallagher, head of Sydney sales trading at RBS, told Fairfax. "Volumes are still appalling domestically and we're going to need to see a trend of positive data before we start to see those volumes return with any kind of passion."
Asian markets were bolstered by strong overnight in Europe and the US. Japan's Nikkei rallied 1.67%, Shanghai 0.3% and Hong Kong's Hang Seng 0.94%. Dow futures were recently up 13 points or 0.1%.
"The news out of Europe has been more constructive, with economic sentiment improving unexpectedly in Germany and better investor demand at the Spanish bond auctions," strategists at Barclays Capital told MarketWatch. "Risky assets have been bolstered further by upside surprises in US corporate earnings."
The Reserve Bank was given further reason to consider cutting the overnight cash rate at next month's policy meeting when the WBC-MI leading index this morning logged its sixth month of below-trend growth outlook. The index, which predicts the likely rate of economic activity up to six months ahead, recorded annual growth of 2.4% in February, compared to the long-term average of 2.9%.
Crude oil futures eased 14 cents this morning to US$104.18 a barrel. Spot gold was little changed, down $1.10 at US$1,649.80 an ounce. The dollar was buying US$1.0396.
Nice gains but not enough volatility this morning for my style of trading. Took a small profit in CSR when it failed to break out of its recent range. Got into TAP too soon. In the queue for a few more.
