China data drives market to five-year high
At the close, the benchmark S&P/ASX 200 Index was up 33.2 points, or 0.64 per cent, at 5234.4. The broader All Ordinaries rose 31.7 points, or 0.61 per cent, at 5230.6.
Positive economic data out of China, strong Australian consumer sentiment and the likelihood of a non-violent outcome in Syria all contributed to a rally on the local market, lifting the All Ords and ASX 200 indices to their highest closing levels since June 2008.
IG Markets analyst Chris Weston said investors were prepared to overlook global economic concerns to focus on growth prospects.
"The Chinese market is the inspiration behind our market's gains," Mr Weston said. "Global equities are in a bit of a sweet spot at the moment."
Mr Weston said Chinese growth was pushing higher than many people had anticipated. That trend looks set to continue as policymakers seek to attract foreign capital, and stem flows out of China.
The local market came out of the blocks early after an overnight rally on international markets as the Obama administration appeared to pursue a diplomatic solution to the Syrian conflict.
Local gains were led by the materials sector, with particular strength in iron ore stocks thanks to a renewed interest in China.
BHP Billiton added 43¢ to $36.33, Rio Tinto gained $1.27 to $64.15 and Fortescue Metals was 29¢ higher at $4.80.
Among the major banks, National Australia Bank added 41¢ to $33.85, ANZ gained 23¢ to $30.40, Commonwealth Bank was 24¢ higher at $74.14 and Westpac rose 7¢ to $32.48. Investment bank Macquarie Group gained $1.59 to $48.55.
The Australian dollar also gained ground and closed the local session at US92.90¢, up from US92.50¢ on Tuesday.
Three-year bond futures prices hit their lowest level in three months as it looks likely the Reserve Bank is getting to the end of its cash rate cutting cycle.
A possible end of the US Federal Reserve's $US85 billion a month bond purchase program, designed to stimulate the American economy, is also a factor.
The key local event for markets on Thursday will be the release of official employment figures for August. The unemployment rate is expected to rise to a four-year high of 5.8 per cent, from 5.7 per cent in July.
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The ASX 200 rose to a five-year high as investors were encouraged by stronger-than-expected economic data out of China, solid Australian consumer sentiment and hopes for a diplomatic solution in Syria — factors that pushed the S&P/ASX 200 up 33.2 points (0.64%) to 5234.4.
Chinese growth was cited as the main inspiration for the market rally. Renewed interest in China lifted the materials sector, particularly iron ore stocks, benefiting miners like BHP Billiton, Rio Tinto and Fortescue Metals.
On the rally day BHP Billiton rose 43¢ to $36.33, Rio Tinto added $1.27 to $64.15, and Fortescue Metals was 29¢ higher at $4.80 — reflecting strength in iron ore and materials stocks.
Major banks also participated in the rally: National Australia Bank added 41¢ to $33.85, ANZ gained 23¢ to $30.40, Commonwealth Bank was 24¢ higher at $74.14, Westpac rose 7¢ to $32.48, and Macquarie Group increased $1.59 to $48.55.
The Australian dollar strengthened, closing the local session at US92.90¢, up from US92.50¢ the previous day — signalling improved market sentiment alongside the equity rally.
Three-year bond futures hit their lowest level in three months as markets priced in the Reserve Bank of Australia nearing the end of its cash rate cutting cycle, implying less likelihood of further rate cuts in the near term.
Markets were also influenced by speculation that the US Federal Reserve might wind back its US$85 billion-a-month bond purchase program, a factor that, together with Chinese growth, shaped investor sentiment and asset flows.
Investors should watch the upcoming official employment figures for August — the article noted the unemployment rate was expected to rise to 5.8% from 5.7% in July, and this release was highlighted as a major near-term event for markets.
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