Improved Chinese factory data and a global rally in anticipation of a new Greece debt deal helped lift Australian shares to a three-week high this morning.
At lunchtime the ASX 200 was trading 69 points or 1.2% ahead at 5679 and on track for its first three-session rise of the month. The financial sector led the rally, rising 1.6% as the threat of a Greek default appeared to diminish overnight. Also strong were health +1.8%, telecoms +1.5% and utilities +1.2%.
“Advances in the Greek situation are behind the flow of funds into US and European stocks [overnight],” Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Japan, told Bloomberg. “It’s difficult to judge without knowing the proposal’s contents in detail, but the market appears to be seeing it as a step forward.”
Chinese factory activity contracted last month but at a slower pace than analysts expected. HSBC's preliminary manufacturing Purchasing Managers' Index improved to a three-month high of 49.6 from 49.2 last month. Analysts expected a reading of 49.4.
China's Shanghai Composite gave up early gains to fall 1.07%, Hong Kong's Hang Seng added 0.35% and Japan's Nikkei 1.61%. Dow futures were recently ahead 34 points or 0.2%.
Crude oil futures bounced 33 cents to US$60.01 a barrel as the July WTI contract expired. Spot gold was $2.30 ahead at US$1,186.40 an ounce. The dollar was buying 77 US cents.
Market movements suggest Greece is a done deal. After five years of regular disappointments, I find that baffling, but it would be unusual for the market to get this sort of binary outcome so wrong. Trading: in and out of ZIP three times - bought each time it broke to a new low and sold into the bounces. Small win in OEL. Was handed a Get-out-of-jail card in PEX from a late buy yesterday and used it at the open.
