A Chinese interest rate cut and stronger-than-expected economic growth helped the Australian share market start the week on the up-swing.
The S&P/ASX 200 climbed 23 points or 0.32 per cent.
Gains in energy, tech and consumer stocks outweighed declines in mining and property companies. A well-received trading update lifted Wesfarmers almost 2.6 per cent.
What moved the market
The market finished near its high for the session after China gave its economy a nudge and reported broadly positive economic data. The People’s Bank of China reduced the cost of medium-term borrowing for the first time since the early days of the pandemic. The interest rate on the bank’s one-year lending facility was cut by ten basis points to 2.85 per cent.
The reduction suggested “the authorities have become more preoccupied about weakness in the economy,” Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong, told Reuters.
The day’s economic data suggested the Chinese economy weathered Omicron lockdowns and a property slump better than expected. Fourth-quarter gross domestic product was 4 per cent stronger than the same period a year earlier. While that was slower than the 4.9 per cent growth in the third quarter, economists had predicted a sharper decline to 3.3 per cent.
December industrial production also surprised to the upside, rising 4.3 per cent. However, retail sales grew an anaemic 1.7 per cent, less than half the growth expected.
“Retail sales was a big miss,” Johanna Chua, head of Asia economics at Citi Global Markets Asia, told CNBC. “This is one area where I think it really requires a little bit more policy support.”
China’s Shanghai Composite firmed 0.59 per cent. Japan’s Nikkei gained 0.74 per cent. The Asia Dow slipped 0.04 per cent. Hong Kong’s Hang Seng shed 0.59 per cent.
The local market overcame mixed leads and the deadening effect of a US market holiday tonight. Wall Street will remain closed until Tuesday for the Martin Luther King Jr public holiday.
The major US indices finished mixed ahead of the long weekend. The tech-heavy Nasdaq put on 0.59 per cent while the Dow fell 0.56 per cent. The S&P 500 edged up less than 0.1 per cent.
Wesfarmers rallied 2.56 per cent after confirming half-year profit will be in line with expectations. The retail conglomerate expects to report net profit after tax of $1.18-$1.24 billion for the half.
“Pleasing” results from Bunnings and Wesfarmers Chemicals, Energy & Fertilisers helped offset Covid-related disruptions and costs at Kmart and Officeworks. Trading conditions improved in the second quarter before weakening this year as the Omicron wave dampened foot traffic.
Adbri jumped 7.17 per cent after securing an extension to supply quicklime to Alcoa for another year. The supply deal will run from January 31 until the same date next year and be worth $25-$35 million in revenue to Adbri.
Pendal Group bounced 7.8 per cent off a 21-month low on news experienced boardroom operator Deborah Page will replace James Evans as Chair. Ben Heap will join as an independent non-executive director.
A 6 per cent increase in funds under management (FUM) last quarter lifted Australian Ethical 3.25 per cent. The asset manager increased FUM to $6.94 billion, thanks to strong net flows and investment performance.
Centuria Industrial REIT announced the purchase of six industrial assets in Sydney, Melbourne and Brisbane to service demand from ecommerce operators. The additions have a combined value of $132.4 million. The share price improved 0.26 per cent during a generally soft session for property stocks.
Clinuvel edged up 2.79 per cent after completing enrolment for a Phase II study into a treatment for strokes.
Aside from Wesfarmers, the best of the heavyweights were Aristocrat Leisure +2.49 per cent, Woodside Petroleum +1.69 per cent and Woolworths +1.26 per cent.
The high-street banks gained between 0.1 and 1.16 per cent. Macquarie Group tacked on 0.43 per cent..
South32 declined 3.11 per cent after announcing the Taylor Deposit at the Hermosa project in the US will progress to a feasibility study. A pre-feasibility study confirmed the zinc-lead-silver deposit’s potential to be the first development of a proposed multi-decade operation.
A down-tick in iron ore helped pull the big three ore miners off multi-month highs. Fortescue Metals retreated 2.81 per cent, Rio Tinto 0.52 per cent and BHP 1.14 per cent.
A glum session for IPOs saw the newly-listed Beforepay dive 44.13 per cent and Vertex Minerals shed 10 per cent.
The session’s biggest falls were gold miner Perseus -5.06 per cent, uranium miner Paladin -3.98 per cent and lithium miner Liontown Resources -3.21 per cent.
US futures drifted in holiday-affected trade. S&P 500 futures were recently off nine points or 0.2 per cent.
Oil trimmed a strong start to the week. Brent crude was lately ahead five US cents or 0.1 per cent at US$86.11 a barrel after earlier touching US$86.59.
Gold reversed early weakness to advance US$2.90 or 0.16 per cent to US$1,819.40 an ounce in electronic trade.
The dollar eased 0.11 per cent to 72.08 US cents.