The Australian share market weakened for a sixth day in seven but is trading well off its low after a report showed China's manufacturing sector unexpectedly accelerated this month.
At lunchtime the ASX 200 was 35 points or 0.7% in the red at 5064 but recovering after slumping to a nine-session low of 5028. Consumer discretionary shares +0.2% were the only sector to advance as Wall Street's overnight tumble pressured the broader market. The heaviest falls were recorded in IT -1.9%, gold -1.5% and telecoms -0.9%. Financials and materials both lost 0.8%.
The tentative recovery gathered steam after the 11.45am EST release of HSBC's preliminary manufacturing purchasing managers' index for August, which rose to 50.1 from 47.7 in July, well ahead of the consensus expectation for a reading around 48.2. The Australian dollar bounced roughly half a cent immediately following the release and was lately buying 89.72 US cents.
"China's manufacturing growth has started to stabilise on the back of modest improvements of new business and output," HSBC chief economist Qu Hongbin told Fairfax. "This is mainly driven by the initial filtering through of recent fine-tuning measures and companies' restocking activities, despite the continuous external weakness. We expect further filtering-through, which is likely to deliver some upside surprises to China's growth in the coming months."
Asian markets struggled to make headway as negative US futures dampened the market mood. Shanghai slipped 0.03%, Hong Kong's Hang Seng 0.61% and Japan's Nikkei 0.33%. Dow futures were recently down 29 points or 0.2%.
Crude oil futures eased another six cents this morning to US$103.79 a barrel. Spot gold was $4.90 weaker at US$1,363.20 an ounce.
A challenging morning at both ends of the market. Asia's response to the manufacturing news suggests traders were more bullish than economists in their expectations - looks like it was mostly priced in. A mixed morning at this trading desk. Nice early win in ALL off the low but let it go too soon. Scalped SAR. Got MBE near the low - good example of the sort of buy that might turn into a hold for a few days if it can sustain this reversal. Also added SMX and FAS - liking the falling volume on the retrace in the latter. Wanted MNC a few pips lower. Out of CFE from yesterday for brokerage.
