Markets in Europe and the US joined Australia overnight in pushing higher, shrugging off fears about China after the early estimate for the Chinese manufacturing sector’s October performance came in stronger than expected.
Helped by positive earnings reports in Europe and the US, reasonable economic data from the eurozone, markets added from between 0.3% to just over one cent.
Gold was also up one per cent at a five week high above $US1,350 an ounce. It later fell to $US1,346. Oil turned positive in late trading.
The Aussie dollar rebounded back over 96 US cents in late trading in New York after dipping to a day;’s low of 95.72.
But the euro hit a new two year high of just over $US1.38.
Our market stood out in Asia with a reasonable gain yesterday, and a smaller rise is forecast this morning by the futures market.
Behind the gain was a solid day for financial shares, led by the Commonwealth Bank which reached a new all time high.
The ASX200 added 16.8 points, or 0.3%, to 5,372.9 and the All Ords rose 16.9 points, or 0.3%, to 5,373.7.
The CBA added 97 cents, or 1.3%, to $75.58, Westpac added 31 cents to $34.18, the ANZ rose 40 cents to $32.37 and the National Australia Bank jumped 12 cents to $35.59.
NAB’s shares are up 38% in the past year, but are still well below its 2007 high of more than $44.
Westpac is still shy of the all time high of $34.68 reached earlier in the year in May and the ANZ was just shy of its all time high of $32.40 reached earlier this week.
CBA shares have jumped 33% from the $56.75 level a year ago. It is now capitalised at $121 billion.
CBA YTD – Record high for CBA
That’s higher than the Australian listed shares of BHP Billiton – but throw in the London shares and BHP’s value sprints to a massive $188 billion.
Driving the banks higher yesterday (and in the past couple of weeks), has been the approaching full year reporting season.
Investors appeared to be very optimistic of higher dividend payments ahead of the release of ANZ and National Australia Bank’s full year results next week.
The news of the higher early estimate from HSBC/Markit for Chinese manufacturing offset another day of higher rate sin the Chinese interbank money markets – which triggered fears the day before that we could see another round of worries about the heath of the country’s banks – as we saw mid year.
The country’s central bank is withdrawing liquidity from markets to try and once again cool bank lending and property prices.
And in an interesting comment yesterday, Reserve Bank of Australia Deputy Governor Philip Lowe told a Melbourne audience yesterday that "The pessimists about China are being proved wrong again. The recent growth numbers were encouraging and I don’t see any reason to fear that growth will be substantially weaker in the period immediately ahead."
News of that comment also helped lift local shares.
