The S&P/ASX200 Index rose as much as 2 per cent in thin morning trading, briefly wiping out yesterday’s 1.9 per cent decline as investors were reassured as to the strength of some company earnings when pallet provider Brambles reiterated its 2013 guidance.
Investors may have also been heartened by better global economic news. A survey of US manufacturing showed expansion yesterday, while US construction spending was also up. European manufacturing data overnight also showed a gain, with the reading for Spain surprisingly strong.
“Investors are looking offshore for direction,” says Joshua Williamson, senior economist at Citigroup in Australia.
At 1150 AEST the index had gained 62.411, or 1.3 per cent, to 4772.70, after rising as high as 4803.50. Total trade at 1100 AEST was just $2 billion.
At 1151 AEST Brambles increased 10.5 cents, or 1.2 per cent, to $9.185 after it said before the ASX opened that its underlying profit – profit from continuing operating before finance costs, tax and significant items – would be unchanged at between $US1.03 billion and $US1.06 billion.
Gold miners surged after the spot price rose a third consecutive day. Bullion’s spot price at 1153 AEST was $US1255.70 an ounce, up 4.6 per cent since June 28, according to Bloomberg data.
At 1154 AEST Evolution Mining added 5.5 cents, or 9.6 per cent, to 63 cents. The stock has slumped 60 per cent in the last 12 months. St Barbara surged 7 cents, or 15 per cent, to 53.5 cents. The stock has plunged 65 per cent in the last year.
BHP, the world’s biggest mining company, rose 69 cents, or 2.2 per cent, to $31.7634 at 1155 AEST. Rio Tinto, the world’s biggest iron ore miner, increased $1.05, or 2 per cent, to $52.78. Iron ore miner Fortescue gained 12.5 cents, or 4.2 per cent, to $3.075.
The spot price for iron ore imported through the northeast Chinese city of Tianjin rose a third consecutive day by 40 cents, or 0.3 per cent, to $US116.90, bringing its gain since June 27 to 2.7 per cent.
Boart Longyear plunged 6.5 cents, or 10 per cent, to 56 cents at 1158 AEST after debt rating agency Moody’s downgraded its rating to Ba3 because of a deterioration in the mining services company’s core business – “the pull back in exploration and drilling expenditure” by Borat’s customers.