Healthier Chinese figures give stocks a lift
The benchmark S&P/ASX 200 Index shot up 53.34 points, or just over 1 per cent, to 5188.3, while the broader All Ordinaries firmed 57.7 points to 5178.
Tony Paterno, senior investment adviser at Ord Minnett, attributed the gains to the Chinese data, which showed factory activity grew last month for the first time in four months, as domestic demand rebounded.
This was according to the final HSBC/Markit Purchasing Managers' Index (PMI), which climbed to 50.1 last month, up sharply from July's 47.7, a day after China's official PMI rose to a 16-month high.
The data supported signs that the Chinese economy might not be slowing as much as feared.
"I think [the PMI] is the highest it's been in over a year now, which is a big positive," Mr Paterno said. "It has lifted energy and resource stocks. The financials have been dragged up as well. They're up about 1 per cent overall. Everything seems to up 1 per cent."
It also fuelled a rally by the Australian dollar, which was up 0.9 per cent at US89.82¢ at market close.
All sectors except utilities ended in positive territory. Resource shares, except for BHP Billiton, had a good day, with the energy and materials sub-indices rising 1.9 per cent and 0.3 per cent respectively.
BHP, which traded ex-dividend, closed down 0.4 per cent at $35.62. Rival Rio Tinto advanced 1.6 per cent to $59.22. "Had BHP not gone ex-dividend, it probably would have been up about 80¢," Mr Paterno said.
Among the energy stocks, Origin outstripped the broader market, rising 4.5 per cent to $13.85, after it said on Friday it would cut its borrowing costs by as much as 50 basis points as it markets Australia's biggest syndicated loan this year.
The big banks also were up, with the financial sector rising 1 per cent. Commonwealth Bank was the biggest mover, firming 1.2 per cent to $73.68.
Bell Potter's Charlie Aitken said that despite the fact many bank analysts saw CBA as overvalued, its strength made sense. "In the eyes of its dominant mum-and-dad investors it's cheap," he said. "You can't part them from the stock as long as the dividend is growing."
Billabong joined the broader market rally, surging 14.1 per cent to 48.5¢.
Frequently Asked Questions about this Article…
Stronger-than-expected Chinese manufacturing data (the final HSBC/Markit PMI rose to 50.1 from July's 47.7) spurred a market rally — the S&P/ASX 200 jumped 53.34 points to 5188.3 and the All Ordinaries rose 57.7 points to 5178, with analysts saying improving Chinese factory activity boosted investor sentiment.
The PMI rebound lifted energy and resource stocks: the energy sub-index rose 1.9% and the materials sub-index climbed 0.3%, with most resource shares enjoying gains (the exception being BHP, which traded ex-dividend).
The stronger Chinese manufacturing readings supported risk sentiment and commodity demand, helping the Australian dollar rally 0.9% to about US89.82¢ at the market close.
BHP closed down 0.4% at $35.62 because it traded ex-dividend that day; by contrast Rio Tinto benefited from the positive commodities backdrop and rose 1.6% to $59.22 — analysts noted BHP would likely have been higher if not ex-dividend.
Origin jumped 4.5% to $13.85 after announcing it expects to cut its borrowing costs by as much as 50 basis points while marketing what it called Australia's biggest syndicated loan this year.
The financial sector rose about 1% overall; Commonwealth Bank firmed 1.2% to $73.68. Bell Potter's Charlie Aitken noted that while some analysts view CBA as overvalued, many retail ('mum-and-dad') investors see it as cheap if the dividend continues to grow.
Yes — all sectors finished in positive territory except utilities, which did not join the broader gains driven by the Chinese PMI-led rally.
Billabong stood out among smaller names, surging 14.1% to 48.5¢ as it joined the broader market rally.
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