Australian shares rallied for the first time in three sessions following profit news from Westpac, Macquarie Bank and JB Hi-Fi before paring gains amid further signs of a slowdown in China.
At lunchtime the ASX 200 was nine points or 0.2% ahead at 5139 and well off the early high of 5183. The initial gains came after Westpac announced record first-half earnings, Macquarie beat profit expectations and raised its dividend and JB Hi-Fi lifted its earnings guidance.
The financials sector hit a five-year high in early trade as Westpac joined CBA above BHP as the largest three companies by index weighting on the ASX 200. The sector shaved its gain to 0.3% in recent action. Other rising sectors included consumer discretionary +1.1%, health +1.2% and materials +0.4%. Gold, industrials and consumer staples lost ground.
"The market is a lot less worried about Europe," Shane Oliver, head of investment strategy at AMP Capital Investors, told Bloomberg. "Profits are continuing to rise and we remain overweight stocks on a positive 12-month view. Housing indicators in the US remain firm and the Fed is on standby. Valuations are still okay."
Most Asian markets advanced despite a slowdown in a measure of Chinese services activity. The non-manufacturing purchasing managers' index eased to 54.5 last month from 55.6 in March. The Shanghai Composite rallied 1.6%, Hong Kong's Hang Seng put on 0.73% while Japan's Nikkei lost 0.76%. Dow futures were recently down five points or less than 0.1%.
Crude oil futures gave back 32 cents this morning to US$93.77 a barrel. Spot gold climbed another $10 to US$1,476.50 an ounce. The dollar was buying $US1.0271.
My least favourite trading conditions: a big open followed by a slow, steady fade. Great if you're short or had something to sell into the open, otherwise hard work. GDY was obviously today's big winner, but I wasn't smart enough to pick it. Instead I took two hours to find a trade and I wouldn't bet the ranch on this bunch: looking for a few pips in ARI, TOL and, em, KCN. Lucky Endless has gone for the day, otherwise I'd be feeling the ruler.
