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China's good news drives market higher

THE sharemarket finished in positive territory yesterday, pushed up by encouraging economic data out of China.
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InvestSMART
By InvestSMART · 22 Sep 2011
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By InvestSMART ·
22 Sep 2011
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THE sharemarket finished in positive territory yesterday, pushed up by encouraging economic data out of China.

The market opened about 20 points higher, drifted back into negative territory and then rose after lunch.

The benchmark S&P/ASX 200 Index finished up 31.6 points, or 0.78 per cent, at 4071.8.

China's leading economic indicators were up 0.6 per cent in July, sending its market more than 2 per cent higher.

The leading indicators showed China was withstanding Europe's debt crisis and faltering growth in the US, IG Markets strategist Chris Weston said.

That followed the International Monetary Fund lowering its growth forecasts for the global economy to 4 per cent for this year and next and warning of a return to recession if Western leaders failed to get their economies back on track.

"It's still very positive, China is still that one beacon of global economic strength in a world which seems to be deteriorating before our eyes at the moment," Mr Weston said.

Attention would turn to the two-day meeting of the US Federal Reserve's Federal Open Market Committee meeting and subsequent interest rate decision.

Locally, healthcare, energy and consumer discretionary sectors such as retail were the best performers.

The best performer among the top 50 was Origin Energy, up 60?, or 4.7 per cent, at $13.45.

Next best was healthcare stock CSL, lifting $1.19, or 4.4 per cent, to $28.39.

Retail stocks fared well after David Jones met its financial guidance in delivering a 1.5 per cent fall in annual profit.

It also maintained its forecasts for its first-half profit, despite continuing weakness in consumer spending.

David Jones rose 6?, or 2.2 per cent, to $2.76.

Harvey Norman added 7?, or 3.5 per cent, to $2.05, Myer was up 4?, or 1.9 per cent, at $2.11, and JB Hi-Fi was 12? higher, up 0.8 per cent, at $15.02. The big banks and miners were mixed.

Commonwealth Bank was the worst performer, down 42?, or 1 per cent, to $43.95, while the other three big banks clawed back earlier losses to finish positively.

National Australia Bank found 19? to $22.19, Westpac was up 8? at $19.31 and ANZ added 7? to $19.39.

BHP Billiton was up 33? at $37.13 on a day it revealed chief executive Marius Kloppers's annual pay rose by 8.5 per cent last financial year to $US11.6 million ($A11.33 million).

Gold closed at $US1813.10 an ounce in Sydney, down $US25.57 from $US1787.53 on Tuesday.

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Frequently Asked Questions about this Article…

The ASX 200 rose after encouraging economic data out of China — the article reports China’s leading indicators were up 0.6% in July, which helped lift global sentiment. Locally the benchmark S&P/ASX 200 finished up 31.6 points (0.78%) at 4,071.8. IG Markets strategist Chris Weston is quoted saying China remains a beacon of global economic strength.

Healthcare, energy and consumer discretionary (retail) sectors were the best performers on the day, according to the article. Those sectors benefited from the positive China data and contributed to the overall market lift.

Among the top 50 stocks, Origin Energy and CSL led the gains. Origin Energy rose about 4.7% to $13.45, while healthcare stock CSL lifted about 4.4% to $28.39, making them two of the day’s biggest movers.

Retailers generally fared well. David Jones rose 2.2% to $2.76 after meeting its financial guidance despite a 1.5% fall in annual profit and maintaining first‑half forecasts. Harvey Norman gained about 3.5% to $2.05, Myer was up about 1.9% to $2.11, and JB Hi‑Fi rose about 0.8% to $15.02.

Performance was mixed: Commonwealth Bank was the worst performer, down about 1% to $43.95. The other major banks finished positively with National Australia Bank at $22.19, Westpac at $19.31 and ANZ at $19.39. Among miners, BHP Billiton rose to $37.13; the article also notes BHP revealed CEO Marius Kloppers’ annual pay rose 8.5% to US$11.6 million (A$11.33 million).

Yes. The International Monetary Fund had lowered global growth forecasts to 4% for this year and next and warned of recession risk if Western economies don’t stabilise — a backdrop that makes China’s positive data more significant. The article also notes investors were turning attention to the US Federal Reserve’s upcoming Federal Open Market Committee meeting and interest rate decision.

The article highlights two items to watch: ongoing Chinese economic indicators and the US Federal Reserve’s two‑day Federal Open Market Committee meeting and subsequent interest rate decision. Those events are likely to influence market direction after the reported gains.

The article reports that gold closed at US$1,813.10 an ounce in Sydney for the session.