Shares marched to a six-week high this morning as solid Chinese economic data offset weak domestic figures.
At lunchtime the ASX 200 was 31 points or 0.7% higher at 4537 after overcoming a retrace following the 11.30am EST release of domestic job ad, retail sales and company profit figures. Most sectors advanced, led by financials +1.1%, property trusts +0.9% and telecoms +0.8%.
A week heavy with domestic economic data commenced with a string of disappointments. Job ads declined for an eighth straight month, falling 2.9% in November. Company profits also dropped 2.9%, fractionally less than expected. October retail sales were flat, confounding expectations for a rise of 0.4%. The contraction in Australian manufacturing deepened last month, with the performance of manufacturing index falling 1.6 points to 43.6 for its ninth straight decline. House prices in capital cities were flat last month, according to RP Data-Rismark. A 1.1% increase in corporate inventories over the quarter provided one of the few bright spots.
"The only good news here is really inventories are up quite strongly over the quarter," JPMorgan chief economist Stephen Walters told Fairfax. "So that's good for growth ... but it does mean firms may be holding too much stock and therefore that's probably a negative for the quarter going forward. All up it's a weaker mix. Given the fact that job ads are down again, retail is really weak, the capex last week was very weak, it does add to the case for a rate cut tomorrow."
Asian markets rallied after Chinese services data showed a modest improvement and a revised manufacturing reading confirmed that factory output is expanding after 11 months of contraction. The non-manufacturing PMI ticked up to 55.6 last month from 55.5 the previous month, while HSBC's final manufacturing PMI for the month was a tenth of a point stronger than the preliminary reading at 50.5 from 49.5 in October. Shanghai rallied 0.19%, Hong Kong's Hang Seng 0.54% and Japan's Nikkei 0.8%. Dow futures were recently up 33 points or 0.3%.
Crude oil futures rallied 13 cents this morning to US$89.07 a barrel. Spot gold was $3 firmer at US$1,719.60 an ounce. The dollar was buying $US1.0416.
Definitely looks like the Chinese economy is turning up. US futures suggest the Yanks like what they read. Those figures helped the market get over some rather grim 11.30am domestic figures. There was a bit of a pullback and then the market remembered it likes rate cuts and bought back in. I had a couple of wins in pullbacks in MTS and CCP, plus part-fills in AOH and DJS for peanuts.
