THE sharemarket closed at its highest level in five weeks after better than expected Chinese economic growth buoyed investor sentiment.
The world's second-largest economy grew by 8.9 per cent in the three months to December. Although that was the slowest rate of expansion for 30 months, it exceeded expectations of about 8.5 per cent growth.
The market extended early gains driven by a strong sale of French treasury bills overnight, despite news that the European Union's second-largest economy was stripped of its AAA credit rating by Standard and Poor's on Friday.
News that Fortescue Metals, Australia's third largest iron ore producer, and Rio Tinto exceeded their production targets also helped resources stocks to post gains of more than 2 per cent.
At the close yesterday, the benchmark S&P/ASX200 index was up 68.4 points, or 1.7 per cent, at 4,215.6, while the All Ordinaries rose 68.8 points, or 1.6 per cent, to 4,277.7.
Energy stocks led the pack, adding 2.7 per cent to claw back Monday's losses.
Fortescue added 3.9 per cent to $4.80 as the company announced it shipped a record 14.77 million tonnes of iron ore in the December quarter while also reducing production costs.
Rio gained 1.25 per cent to $65.70 after the mining giant's global iron ore operations produced a record 65 million tonnes in the December quarter, beating analysts' forecasts.
The results added to hopes that BHP Billiton would top its own expectations when it reports its production results today.
BHP shares rose 2 per cent to $36.70, the highest since December 8.
"The latest announcement from Fortescue is helping confidence in the mining sector," CommSec chief economist Craig James said. "We're at the point where China is looking to invigorate their economy and this is going to help our mining sector."
Wesfarmers climbed 1.8 per cent to $30.55 after it announced that its coal production for the December quarter at its Curragh mine was 2.2 million tonnes, 1.7 per cent down on the previous quarter.
Uranium miner Paladin Energy surged 11.8 per cent to $1.72 after it reported record production in the December quarter and re-affirmed full-year production targets.
Shares in Arafura Resources rose 25 per cent to 47.5? after it reported it had produced rare earths oxide samples for potential customers.
Gold closed in Sydney at $US1658.76 per ounce, up $US20.11.
Volumes were light, with 1.59 billion shares traded for $3.68 billion as US markets were closed overnight on Monday for Martin Luther King day.
Frequently Asked Questions about this Article…
How did China's latest economic growth figures affect Australian investor sentiment and the sharemarket?
Better-than-expected Chinese growth — 8.9% in the December quarter, above forecasts of about 8.5% — helped buoy investor sentiment and contributed to the Australian sharemarket closing at its highest level in five weeks.
Which ASX indexes rose and by how much after the positive market tone?
The benchmark S&P/ASX 200 rose 68.4 points (1.7%) to 4,215.6, while the All Ordinaries increased 68.8 points (1.6%) to 4,277.7.
Which major miners reported stronger-than-expected production and how did their shares react?
Fortescue reported a record 14.77 million tonnes shipped in the December quarter and its shares rose 3.9% to $4.80; Rio Tinto produced a record 65 million tonnes and gained 1.25% to $65.70. BHP shares also rose about 2% to $36.70 on hopes it would beat expectations.
Did smaller miners and specialty resource stocks see notable moves?
Yes — uranium miner Paladin Energy surged 11.8% to $1.72 after reporting record production and reaffirming targets, and Arafura Resources jumped 25% to 47.5 after producing rare earths oxide samples for potential customers.
What sectors led the market rally and why did they stand out?
Energy stocks led the gains, adding about 2.7% as they clawed back Monday’s losses; overall strength in resources and mining production results also supported the rally, lifting resource stocks by more than 2%.
Were there any notable international developments that influenced market movement?
Yes — markets extended early gains helped by a strong sale of French treasury bills overnight, despite news that the EU’s second-largest economy had been stripped of its AAA credit rating by Standard & Poor’s.
What happened to gold prices and trading volumes in Sydney during this session?
Gold closed in Sydney at US$1,658.76 per ounce, up US$20.11. Trading volumes were light, with 1.59 billion shares traded for about $3.68 billion, partly because US markets were closed for Martin Luther King Day.
How did analysts interpret the mining production results and their impact on the sector?
CommSec chief economist Craig James said Fortescue’s announcement was helping confidence in the mining sector and that signs China is looking to invigorate its economy should support Australia’s mining industry.
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