Australian shares rallied for a second morning, accelerating gains after Chinese manufacturing data showed a modest improvement on last month.
At lunchtime the ASX 200 was ahead 70 points or 1.7% at 4152 with cyclical sectors, including the banks and big miners, leading the way. The market surged from the open and extended its rally after the 12.30 pm release of Chinese manufacturing figures for August.
The HSBC Flash manufacturing purchasing managers' index edged up from last month's reading of 49.3 to 49.8 but remained under the 50-point mark that separates expansion from contraction.
"These data suggest that the hard landing risk is still remote," HSBC said in a note accompanying the data quoted on MarketWatch. "This provides leeway for the [People's Bank of China] to keep the current tightening measures in place."
Asian markets and US futures responded positively to the news. Dow futures were recently ahead 67 points or 0.62%. Shanghai rallied 0.89% and Hong Kong's Hang Seng 0.42%. Japan's Nikkei was closed for lunch when the data was released but earlier put on 0.1%.
Crude oil futures rallied another 42 cents this morning to US$84.83 a barrel. Spot gold was $4.70 softer at US$1,896.40 an ounce. The dollar was buying US$1.0436.
China to the rescue, even if its horse looks a bit lame. A second month of contracting manufacturing is hardly great news but this beaten-up market will take what it can get. I had a few distractions this morning but returned to my current favourite, BSL, for another bounce. Also had a small scalp in LCY.
