Chinese trade figures moderate gains

THE sharemarket finished modestly higher, well off the day's peak, after weaker than expected Chinese trade figures raised fresh concerns over the slowing of the world's second-largest economy.

By InvestSMART · 11 Dec 2012

By InvestSMART ·
11 Dec 2012

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THE sharemarket finished modestly higher, well off the day's peak, after weaker than expected Chinese trade figures raised fresh concerns over the slowing of the world's second-largest economy.

The benchmark S&P/ASX 200 Index rose 6.1 points, or 0.1 per cent, to 4557.9, while the broader All Ordinaries gained 6.5 points, or 0.1 per cent, to 4562.4.

Among the sectors, materials did most of the heavy lifting, up 0.9 per cent. Gold miners added 0.6 per cent and financials inched up 0.2 per cent.

Health stocks struggled, dropping 1.5 per cent, energy slipped 0.3 per cent and consumer staples lost 0.4 per cent.

Patersons Securities strategist Tony Farnham said good performances from base materials in the United States and Britain, as well as China's factory output rising to an eight-month high, helped lift mining heavyweights BHP and Rio Tinto.

Rio Tinto added 1.9 per cent to $61.30, while BHP edged up 0.6 per cent to $34.95.

"Any of these partial indicators that indicate the Chinese economy has found a floor in terms of the growth slowdown we've seen of late is well received by the market," Mr Farnham said.

But a later release of data from China showed that exports rose in November at a much weaker rate and imports were flat compared with the previous year. Chinese exports rose just 2.9 per cent from a year earlier, well below expectations of 9 per cent.

As a result, the local market shed much of its gains after the announcement.

Ten Network shares were the biggest loser for the day, down 9.1 per cent to 24.5?, after the broadcaster resumed trading following its deeply discounted $230 million capital raising. The drop was expected after it sold shares to institutions at 20? each.

Southern Cross Austereo also struggled, falling 5.9 per cent to $1.04, after it pulled all advertising from its 2Day FM unit due to the growing controversy surrounding two of its hosts and their prank call to a London hospital.

Elsewhere in the media, Fairfax Media dropped 1.1 per cent to 45.5?, Seven West Media lost 0.3 per cent to $1.58, while News Corp bucked the trend, adding 0.7 per cent to $24.42.

Fortescue Metals jumped 6.9 per cent to $4.05 as the miner continued its efforts to reduce debt by preparing to sell down its stake in a joint venture with BC Iron.

The Pilbara junior will pay Fortescue $190 million for an extra 25 per cent of the project.

Among the banks, Westpac rose 0.6 per cent to $25.90 and NAB added 0.3 per cent to $24.58. CBA was relatively flat at $60.90 and ANZ slipped 0.2 per cent to $24.84.

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Frequently Asked Questions about this Article…

How did weaker-than-expected Chinese trade figures affect the Australian sharemarket (ASX)?

The article says the ASX finished modestly higher but well off the day's peak after weaker-than-expected Chinese trade data raised concerns about a slowing Chinese economy. Initial gains were pared once China reported exports up only 2.9% year-on-year (well below the 9% expected) and flat imports, which made the local market shed much of its earlier gains.

Which ASX indices and sectors moved on the day and by how much?

According to the article, the S&P/ASX 200 rose 6.1 points (0.1%) to 4,557.9 and the All Ordinaries gained 6.5 points (0.1%) to 4,562.4. Materials led the gains, up 0.9%, gold miners added 0.6% and financials edged up 0.2%. Health stocks fell 1.5%, energy slipped 0.3% and consumer staples lost 0.4%.

Why did mining giants BHP and Rio Tinto rise despite weaker Chinese trade data?

The article cites Patersons strategist Tony Farnham, who said partial indicators — such as stronger performances from base materials in the US and Britain and an increase in China's factory output to an eight-month high — supported mining names. As a result, Rio Tinto added 1.9% to $61.30 and BHP edged up 0.6% to $34.95.

What caused Fortescue Metals Group’s shares to jump in the article?

Fortescue Metals jumped 6.9% to $4.05 after the miner continued efforts to reduce debt by preparing to sell down its stake in a joint venture with BC Iron. The deal involved BC Iron paying Fortescue $190 million for an additional 25% of the project.

Why did Ten Network shares drop sharply after resuming trading?

Ten Network was the biggest loser that day, down 9.1% to 24.5 (as reported), after resuming trading following a deeply discounted $230 million capital raising. The fall was expected because the broadcaster sold shares to institutions at a significant discount during the raising.

How did the broader media sector perform on the day?

The article reports mixed media performance: Southern Cross Austereo fell 5.9% to $1.04 after pulling advertising from its 2Day FM unit amid controversy, Fairfax Media dropped 1.1%, Seven West Media lost 0.3% to $1.58, while News Corp bucked the trend and added 0.7% to $24.42.

What happened to major Australian bank shares during the session?

Bank shares were generally stable to slightly positive: Westpac rose 0.6% to $25.90, NAB added 0.3% to $24.58, CBA was relatively flat at $60.90, and ANZ slipped 0.2% to $24.84, as reported in the article.

What does the article suggest everyday investors should note about market reactions to international data like Chinese trade figures?

The article highlights that markets can initially react positively to partial indicators (for example, higher factory output or stronger commodity performance) but then reverse when more complete or weaker data arrives — in this case weaker Chinese export and import numbers. That illustrates how quickly sentiment can change in response to international economic updates.