Chinese gain, rate cut hopes lift stocks

THE Australian sharemarket finished at a near six-week high, buoyed by encouraging Chinese manufacturing and expectations of a Reserve Bank of Australia interest rate cut on Tuesday.

By InvestSMART · 4 Dec 2012

By InvestSMART ·
4 Dec 2012

Comments

THE Australian sharemarket finished at a near six-week high, buoyed by encouraging Chinese manufacturing and expectations of a Reserve Bank of Australia interest rate cut on Tuesday.

At the close on Monday, the benchmark S&P/ASX200 index was 25.5 points, or 0.57 per cent, higher at 4531.5, while the broader All Ordinaries index was up 22 points, or 0.49 per cent, at 4540.0.

On the ASX 24, the December share price index futures contract was 28 points higher at 4544, with 24,541 contracts traded.

CommSec analyst Juliette Saly said investors shrugged off weak Australian retail figures and instead bought into local stocks after the release of encouraging data on the weekend that showed the biggest gain in 13 months for Chinese manufacturing activity. "Our market's taken that lead and we've seen some good buying coming through today," Ms Saly said.

Figures released by the Bureau of Statistics showed retail spending was steady in October, below expectations of a 0.4 per cent rise.

The weaker retail figure added to expectations the RBA would cut the cash rate by 0.25 percentage points to 3.00 per cent when its board meets on Tuesday for the last time until February 2013.

"Retail trade figures were disappointing but we've seen the market bounce back from the initial shock," Ms Saly said. "News that we're expecting a rate cut tomorrow will help sentiment."

Among the major retailers, JB Hi-Fi gained 33? to $10.26, Wesfarmers was 40? higher at $35.95 and Woolworths rose 15? to $29.43.

Department store operator David Jones fell 5? to $2.44 and Myer shares fell 4? to $2.13.

Among the big miners, BHP Billiton was up 15? to $34.54, Rio Tinto fell 21? to $58.54 and Fortescue dipped 15? to $3.76.

Among the banks, ANZ jumped 33? to $24.69, Commonwealth Bank surged $1.12 to $60.81, while National Australia Bank was 1? lower at $24.29 and Westpac was 6? higher at $25.56.

Television broadcaster Ten Network shares fell 3? to 33.5?.

National turnover was 1.49 billion securities worth $3.82 billion, with 475 stocks up, 473 down and 351 unchanged. The price of gold in Sydney closed at $US1719.50 per fine ounce, down $US11.35 from $US1730.85 on Friday. AAP

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What pushed the Australian sharemarket to a near six-week high?

According to the article, the Australian sharemarket rose to a near six-week high after encouraging Chinese manufacturing data and growing expectations that the Reserve Bank of Australia (RBA) would cut interest rates. The benchmark S&P/ASX200 closed 25.5 points higher at 4,531.5 and the All Ordinaries was up at 4,540.0.

How did the Chinese manufacturing report affect investor sentiment in Australia?

The article notes investors bought into local stocks after data showed the biggest gain in 13 months for Chinese manufacturing activity. CommSec analyst Juliette Saly said the market took its lead from the encouraging Chinese data, which helped drive buying across the ASX.

Were investors expecting an RBA rate cut and how did that influence markets?

Yes — the article says weaker Australian retail figures added to expectations that the RBA would cut the cash rate by 0.25 percentage points to 3.00% when it met on Tuesday. Juliette Saly is quoted saying the expectation of a rate cut was helping market sentiment.

Which major retail stocks moved on the day and how did their prices change?

Per the article, JB Hi‑Fi closed at $10.26, Wesfarmers at $35.95 and Woolworths at $29.43. Department store operator David Jones fell to $2.44 and Myer shares declined to $2.13.

How did big mining stocks perform during the session?

The article reports that BHP Billiton rose to $34.54, Rio Tinto fell to $58.54, and Fortescue dipped to $3.76 during the trading session.

What were the notable moves among the major banks?

According to the article, ANZ jumped to $24.69, Commonwealth Bank rose to $60.81 (a $1.12 gain), National Australia Bank was at $24.29, and Westpac closed at $25.56.

What did trading volume and futures activity show about market breadth and momentum?

The article states the ASX 24 December share price index futures contract was 28 points higher at 4,544 with 24,541 contracts traded. National turnover was 1.49 billion securities worth $3.82 billion, with 475 stocks up, 473 down and 351 unchanged — indicating broad participation across the market.

What happened to the gold price in Sydney on the day covered by the article?

The article reports the price of gold in Sydney closed at US$1,719.50 per fine ounce, down US$11.35 from US$1,730.85 on the prior Friday.