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.
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The S&P/ASX 200 and the All Ordinaries both finished the day up (S&P/ASX 200 added 19.7 points to 4901.4) despite slipping in afternoon trade after weaker-than-expected Chinese data. Morning gains were largely held as investors looked past the immediate shock, but the China figures did shave back some of the earlier advances.
Resource stocks, which depend heavily on Chinese demand, were hit hardest in afternoon trade after China's exports fell 3.1% and imports fell 0.7% in June. BHP Billiton still closed 22¢ higher at $31.83 after earlier gains of up to 86¢, while Rio Tinto gained 35¢ to $52.39 but fell short of its earlier intraday gains.
Newcrest moved back into positive territory following several days of heavy selling, gaining 21¢ to $9.95. The move was in line with the falling gold price referenced in the session commentary.
The big four were mixed: ANZ fell 2¢ to $28.64, NAB edged 3¢ higher to $29.45, Westpac added 9¢ to $29.04, and Commonwealth Bank rose 21¢ to $70.35. Macquarie Group outperformed, up $1.38 (3.2%) to $44.89 after positive broker reports. National turnover for the day was about 1.6 billion securities worth $4.5 billion, showing solid trading activity.
The Australian dollar bounced back from earlier losses tied to the Chinese trade figures and was trading at US91.96¢ at 5pm, up from US91.83¢ the day before. Currency moves matter for investors because they can affect exporters, commodity prices and offshore earnings of Australian companies.
Investors were awaiting the Australian June labour force figures and the US Federal Open Market Committee (FOMC) minutes, both due Thursday morning AEST. Comments by the US Federal Reserve chair in relation to those minutes were also flagged as potential market movers.
IG market analyst Chris Weston described the Chinese data as 'a slap back to reality,' saying Chinese growth was 'firmly in question' and that this would have 'massive ramifications for the Australian economy,' highlighting sensitivity of Australia’s resources sector to Chinese demand.
The market showed resilience by finishing higher despite a midday hit from weaker Chinese trade figures. Key points for everyday investors: resource stocks are sensitive to China data, banking stocks can move differently within the sector, watch upcoming domestic labour data and US FOMC minutes, and keep an eye on the Aussie dollar as it reacts to global news.
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