The share market has a fresh six-year closing high in its sights as upbeat Chinese data helps offset confirmation that domestic economic growth slowed last quarter.
At lunchtime the ASX 200 was trading five points or 0.1% ahead at 5663 as gains in telecoms +0.8%, industrials +0.6% and financials +0.4% outweighed falls in gold -2%, energy -0.9% and metals & mining -1.3% as BHP traded without its dividend.
The index pared gains after second-quarter data showed growth in GDP slowed to 0.5% from 1.1% over the first three months of the year. Annual growth eased to 3.1% from 3.5% for the 12 months through to March. The figures were broadly in line with expectations. A separate measure of services activity was flat in August.
"The second quarter was worse than Q1 but there's a fair amount of statistical payback here, and when we average out the first half it looks like GDP growth tracking along at 3% per annum - so a trend-type outcome, and one that looks good when you benchmark it against all the negatives that were at work through that period," Michael Blythe, Chief Economist at the Commonwealth Bank, told Fairfax. "It's probably a touch stronger than the Reserve Bank was expecting and we think this transition story is a bit more advanced than they think. It certainly seems there's little chance of a rate cut any time soon, and the next move will be up."
Asian markets rallied after two gauges of services activity rebounded last month from a slowdown in July. The official non-manufacturing PMI rose to 54.4 from a six-month low of 54.2 in July. HSBC's measure improved to 54.1 from a nine-year low of 50 in July. China's Shanghai Composite and Japan's Nikkei gained 0.82% and Hong Kong's Hang Seng 1.04%. Dow futures were recently up 15 points or 0.1%.
Crude oil futures dipped two cents this morning to US$93.25 a barrel. Spot gold was 10 cents firmer at US$1,266.60 an ounce. The dollar was buying 92.8 US cents.
The market direction is supportive, but volumes have dropped this week. Particularly noticeable in volatile trading favourites like SBB and BCT, which took forever to get going this morning. Always a struggle to find trades when volumes/volatility is low. I caught AMP at the post-dividend low and took a small punt on BLK.
