The Australian stock market has begun the year brightly as an up-tick in domestic manufacturing bolstered optimism following signs of improvement in Chinese, Indian and German output.
At lunchtime the ASX 200 was ahead for the first session in four, rising 44 points or 1.1% to 4101. Resource stocks led the gains, with the gold sector up 2.5% and metals & mining 2%. Defensive utilities stocks were the only sector to lose ground, falling 0.2%.
"We had better than expected Chinese manufacturing PMI data and we had some fairly positive sessions on the DAX and the CAC overnight of 3 and 2% respectively," Cameron Peacock, market analyst at IG Markets, told Fairfax. "So we were always likely to see a little bit of an upside bias to the market today."
The market got another leg-up ahead of the opening bell as a report showed manufacturing expanding at the end of last year. The AiG/PWC manufacturing index rose 2.4 points to 50.2 in December. The improved reading followed reports this week of increased output in China, India and Germany.
"The result points to the resilience of Australian manufacturers against formidable headwinds," Ai Group chief executive Heather Ridout told Fairfax. "While the tentative pick-up in... activity is encouraging, clearly the sector remains vulnerable to any renewed downturn in the global economy and to the underlying structural pressures associated with strong commodity prices."
South Korea's Kospi and Hong Kong's Hang Seng rallied 1.7% this morning. Japanese and Chinese markets were closed for a holiday.
An increase in global risk appetite was underlined by a rise in the Australian dollar to US$1.0289. Spot gold, which has lately traded more like a risk asset, rallied $11.40 to US$1,576.90 an ounce.
Great to see the market start the year with a dose of New Year optimism. I think we all have euro-gloom fatigue and would welcome something new to dance to. There were a few dancers this morning, but you had to be quick if you wanted a spin. Plenty of wallflowers, too. Just one spin for me this morning - a modest gain in APA.
