Most regional markets advanced this morning as China cut rural lending restrictions and Japan reported an unexpected trade surplus.
At lunchtime the ASX 200 was ahead 19 points or 0.5% at 4274, reversing yesterday's loss. Financials were the main driving force, rising 0.8%. Also strong were gold stocks +1.4%, property trusts +0.8% and telecoms +0.9%.
Most Asian markets improved after Japan said surging exports to the US helped it produce a US$395 million trade surplus last month. Economists had predicted a deficit. Japan's Nikkei put on 0.32% this morning and Hong Kong's Hang Seng added 0.11%.
Shanghai dropped 0.38% ahead of this afternoon's flash manufacturing report after the central bank announced it was bolstering credit flow in rural areas by cutting the amount of money that branches of Agricultural Bank of China have to hold back in reserve. Dow futures were recently up 14 points or 0.1%.
The gloomy mood in much of the local business community was reflected in a quarterly survey released this morning showing business conditions at their weakest since the GFC. The WBC-ACCI composite index eased to 47.4 from 48.2 points in the December quarter. The fall marked the fourth straight quarter that the index has missed the 50-point level that divides contraction from expansion.
"Mainstream business continues to be hampered by a lack of confidence and increasing concerns about rising costs and taxes, such as the carbon tax," ACCI director of economics and industry policy Greg Evans told Fairfax. "It seems only the benefit of further rate cuts will help improve overall sentiment."
Crude oil futures rallied 22 cents this morning to US$107.05 a barrel. Spot gold was $5.20 stronger at US$1,654.60 an ounce. The dollar was buying US$1.0474.
Bring on the Chinese manufacturing report (due at 1.30pm EST). It's not a great sign that Shanghai is lower ahead of the report - traders in China seem to have a remarkable ability to... ahem... "sense" what's coming. Still, I could use a little volatility because this morning's armchair ride threw up none of the sort of trades I like. Instead I delivered a master-class in how to place buy orders exactly one pip too low to get hit. I should charge for that information.
