The S&P/ASX200 Index rose as much as 1.4% in morning trading after a survey showed domestic consumer sentiment remained positive, despite concerns about business confidence and a loss of manufacturing jobs perhaping points to a weaker economy.
At 1304 AEST the index was up 37.046, or 0.8%, to 4918.70 after rising as high as 4950.80. The latest Westpac survey of consumer sentiment showed a fall in sentiment of 0.1% in July to 102.1 points. Still, Citigroup says Australian household consumption is increasing, albeit at very modest levels.
Paul Brennan, a Citigroup economist, says the positive consumer sentiment reading “is despite the survey period following the political turmoil that resulted in the return to the prime ministership of Kevin Rudd and more high-frequency news about potential closures of some manufacturing facilities and the impact this would have on local jobs" (see Adam Carr's Can Australia avoid a confidence death spiral?).
“It is possible that the fall in the exchange rate to a three-year low may have been an offset to these developments,” Brennan adds.
The S&P/ASX200 Index has gained 5.8% to date this year in Australian dollar terms. In US dollar terms it is down 7%. The Australian dollar has declined 13% since April 11 when it was at $US1.0545. At 1305 AEST the Australian dollar was at US cents 91.48, down 0.3% from yesterday when it was at US cents 91.76, according to Bloomberg data.
Among the market’s biggest gainers was the manufacturer of industrial products such as crusher liners and milliners Bradken, which rose 22.5 cents, or 5.1%, to $4.665 after rising as much as 6.3% to $4.72. The stock has dropped 15% this year.
Gold miner Resolute Mining, down 56% in the last 12 months, rose 3.5 cents (6.3%) to 59.5 cents after rising as much as 8.9% to 61 cents in earlier trade. Gold’s spot price has gained 0.9% since June 28 when it was trading at $US1200.76 an ounce. At 1307 AEST spot gold was at $US1245.60 per ounce.
Rio Tinto, the world’s biggest iron ore producer, added 45 cents, or 0.9%, to $52.49, while BHP Billiton, the world’s biggest mining company, gained 37 cents, or 1.2%, to $31.98. Iron ore producer Fortescue Metals increased 6 cents, or 1.8%, to $3.39.
The spot price for iron ore imported through the northeast Chinese port city of Tianjin rose yesterday by $US1.80, or 1.5%, to $US123.70 a tonne. The Tianjin iron ore spot price has gained 12% since May 31.