China figures provide shot in the arm

THE sharemarket closed strongly higher, pushing through the 4400-mark to its highest close in 10 days, supported by miners that were buoyed by data showing manufacturing in China at a 13-month high.

By InvestSMART · 23 Nov 2012

By InvestSMART ·
23 Nov 2012

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THE sharemarket closed strongly higher, pushing through the 4400-mark to its highest close in 10 days, supported by miners that were buoyed by data showing manufacturing in China at a 13-month high.

The benchmark S&P/ASX 200 Index jumped 43.6 points, or 1 per cent, to 4413.1, while the broader All Ordinaries added 41.7 points, or 0.9 per cent, to 4432.4.

All the major sectors posted gains, with telecommunications up 1.8 per cent, consumer staples up 1.1 per cent and materials and financials rising 0.9 per cent.

"In terms of impact of the sector on the overall market, the fact that the miners and the financials combined make up around 60 per cent of the market, when both of those sectors improve pretty much the whole market does," said CommSec analyst Steven Daghlian.

China's manufacturing sector gave the latest indication of recovery when the HSBC Flash Manufacturing Purchasing Managers Index rose to a 13-month high of 50.4. A measurement above 50 indicates the sector is expanding.

"When the manufacturing sector is looking good in China, it's a positive sign that it could lead to higher demand for Australian commodities down the track," Mr Daghlian said.

This helped the dollar reach a high of $US1.0402 for the day, before falling back to around $US1.0385.

Both the big miners posted gains, with BHP up 1 per cent to $33.69, while rival Rio Tinto added 0.2 per cent to $57.08. Iron ore miner Fortescue failed to cash in on the positive data from China, falling 2.6 per cent to $3.80.

Among the banks, CBA jumped 1.4 per cent to $58.67, Westpac rose 0.9 per cent to $24.83 and ANZ added 0.9 per cent to $23.74. NAB bucked the trend, slipping 0.1 per cent to $23.64.

Rare-earths miner Lynas jumped 7.1 per cent to 67.5? after it said its controversial processing plant in Malaysia would probably be at near-full production next month.

Telstra pushed to fresh four-year highs, rising 1.9 per cent to $4.27. It is enjoying a nice run in 2012, up 28.2 per cent.

Retail shares pulled back some lost ground. Department store Myer jumped 2.4 per cent to $2.15, while David Jones rose 1.2 per cent to $2.44 after disappointing the market on Wednesday when it released its sales numbers for the first quarter.

Wesfarmers pushed up 1.6 per cent to $34.94, while Woolworths inched up 0.5 per cent to $28.62.

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Frequently Asked Questions about this Article…

How did the Australian sharemarket (ASX) close and what were the index moves?

The Australian sharemarket closed strongly higher, with the S&P/ASX 200 up 43.6 points (1%) to 4,413.1 and the All Ordinaries rising 41.7 points (0.9%) to 4,432.4. The market pushed through the 4,400 mark to its highest close in 10 days.

Which ASX sectors led gains and why does that matter for everyday investors?

All major sectors posted gains: telecommunications (+1.8%), consumer staples (+1.1%), and materials and financials (each +0.9%). This matters because miners and financials together make up around 60% of the market, so strength in those sectors tends to lift the overall ASX performance.

What did China's manufacturing PMI report say and how did it affect Australian markets?

The HSBC Flash Manufacturing PMI for China rose to a 13‑month high of 50.4. A reading above 50 signals expansion, and the stronger PMI provided a shot in the arm for Australian miners and the broader market by suggesting potential higher future demand for Australian commodities.

How did major mining stocks react to the China manufacturing data?

Big miners generally posted gains: BHP rose 1% to $33.69 and Rio Tinto added 0.2% to $57.08. Iron ore miner Fortescue, however, fell 2.6% to $3.80 and didn’t benefit from the positive China data on the day.

How did the big Australian banks perform on the day?

Bank shares were mostly higher: Commonwealth Bank (CBA) jumped 1.4% to $58.67, Westpac rose 0.9% to $24.83, ANZ added 0.9% to $23.74, while NAB slipped 0.1% to $23.64.

Which individual companies stood out and why should investors notice them?

A few standouts: Telstra climbed 1.9% to $4.27 and was up 28.2% year‑to‑date in 2012. Rare‑earths miner Lynas jumped 7.1% to 67.5 after saying its Malaysian processing plant would likely be near full production next month. Retailers Myer (+2.4% to $2.15) and David Jones (+1.2% to $2.44) recovered some ground, while Wesfarmers rose 1.6% to $34.94 and Woolworths inched up 0.5% to $28.62.

How did the Australian dollar move on the China PMI and market news?

The Australian dollar strengthened on the data, reaching a high of US$1.0402 for the day before easing back to around US$1.0385.

What should everyday investors take away from this market reaction to Chinese data?

The key takeaway is that improving Chinese manufacturing sentiment can boost demand expectations for Australian commodities, supporting miner stocks and lifting the broader market. Given miners and financials account for a large share of the ASX, positive China data can have an outsized impact on overall market performance.