Market shrugs off China slowdown gloom
The benchmark S&P/ASX 200 Index added 19.7 points, or 0.4 per cent, to 4901.4. The broader All Ordinaries Index gained 18.9 points, or 0.39 per cent, to 4885.4.
Data from the world's second-largest economy showed exports unexpectedly fell 3.1 per cent in June, and imports fell 0.7 per cent.
IG market analyst Chris Weston said the market shed most of the gains it had posted in morning trade after the release of weaker than expected Chinese figures.
"The Chinese data has been a slap back to reality," he said. "Chinese growth is firmly in question and that's going to have massive ramifications for the Australian economy."
The resource sector, heavily dependent on Chinese growth, was hit the hardest in afternoon trade.
BHP Billiton closed 22¢ higher at $31.83 after rising by as much as 86¢ earlier. Rio Tinto gained 35¢ to $52.39, well below its earlier gains of up to $1.36. Newcrest was back in positive territory after several days of heavy selling, in line with the falling gold price. Its shares gained 21¢ to $9.95.
The big four banks were mixed, with ANZ losing 2¢ to $28.64. National Australia Bank edged 3¢ higher to $29.45, Westpac added 9¢ to $29.04 and Commonwealth gained 21¢ to $70.35. Macquarie Group rose $1.38, or 3.2 per cent, to $44.89 after positive broker reports on Tuesday. National turnover was 1.6 billion securities worth $4.5 billion.
Meanwhile, the dollar was higher after bouncing back from losses caused by the Chinese trade figures. At 5pm on Wednesday, it was trading at US91.96¢, up from US91.83¢ on Tuesday.
LTG Goldrock director Andrew Barnett said the dollar dipped after official data from China showed the country's monthly trade surplus fell by 14 per cent in June, as imports and exports both unexpectedly declined.
But the market was now awaiting Australian June labour force figures and the US Federal Open Market Committee minutes, both to be released on Thursday morning, Australian time, he said.
"What the Aussie is going to really react to are the FOMC minutes and any comments that US Federal Reserve chairman Ben Bernanke makes on Thursday," Mr Barnett said.
Frequently Asked Questions about this Article…
The benchmark S&P/ASX 200 rose 19.7 points (0.4%) to 4,901.4, while the broader All Ordinaries gained 18.9 points (0.39%) to 4,885.4, despite slipping in afternoon trade after weaker-than-expected Chinese data.
June data showed China’s exports unexpectedly fell 3.1% and imports fell 0.7%, and the monthly trade surplus declined about 14%. Because Australia’s resource sector is heavily dependent on Chinese growth, those weaker figures triggered afternoon losses and raised questions about demand for commodities.
BHP closed 22¢ higher at $31.83 after earlier gains of as much as 86¢; Rio Tinto gained 35¢ to $52.39 (well below earlier gains of up to $1.36); and Newcrest climbed 21¢ to $9.95, returning to positive territory after several days of heavy selling linked to a falling gold price.
Bank moves were mixed: ANZ lost 2¢ to $28.64, National Australia Bank edged 3¢ higher to $29.45, Westpac added 9¢ to $29.04, and Commonwealth Bank gained 21¢ to $70.35. Macquarie Group outperformed, rising $1.38 (3.2%) to $44.89 after positive broker reports.
National turnover was 1.6 billion securities worth $4.5 billion. Higher turnover generally signals stronger market activity and liquidity, which can make it easier to buy or sell positions without large price impact.
The Aussie was volatile: it dipped after the Chinese data but bounced back and was trading at US91.96¢ at 5pm, up from US91.83¢ the previous day. Commentators noted the drop in China’s trade surplus contributed to the initial dip.
The market was awaiting Australian June labour force figures and the US Federal Open Market Committee (FOMC) minutes — plus any comments from US Federal Reserve chair Ben Bernanke — all of which could drive further moves in the Aussie and Australian shares.
The market’s modest overall gain shows resilience, but the resource sector’s sensitivity to Chinese data highlights exposure risk. Everyday investors may want to monitor commodity-linked holdings and upcoming labour and FOMC data, since those reports could influence prices and sentiment in the near term.
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