Market sentiment lifted by positive Chinese economic growth data

Stock Markets

Australian shares are poised to open marginally higher today on the back of positive Chinese quarterly economic growth data which was released yesterday. China's industrial output surged 8.5% in March from a year earlier, the fastest pace since July 2014 and well above forecasts of a 5.9% increase. Retail sales from China were also better than expected with a rise of 8.7%, with economists' forecasting for an 8.3% increase. The positive economic data largely eased concerns about the overall health of the Chinese economy and quelled fears of global economic slowdown as it became apparent that Beijing's stimulus efforts to reverse a slowdown are starting to gain traction.

Despite the better than expected Chinese data, Wall Street's main indexes closed in negative territory overnight. The indexes were weighed down by mixed corporate results including a revenue miss from IBM (-4.14%) and a continued decline in UnitedHealth Group (-1.86%) amid concerns regarding the impact of potential changes to US policy on managed care companies. The Dow Jones, S&P 500 and NASDAQ 100 closed down 3.12 (-0.01%), 6.61 (-0.23%), and 4.145 (-0.05%) points respectively.  

The benchmark S&P/ASX200 index closed lower on Wednesday with the index losing 21 (-0.33%) points, as it was dragged lower by large miners and health care stocks. Miners lost ground after courts in Brazil said Vale's Bructu mine could resume operations within 72 hours. The mine's suspension after a dam disaster in January had caused shortages of iron ore and driven up the price. Consequently, BHP dropped 2.72%, Rio Tinto was down 4.74% and Fortescue Metals dropped 8.52%.

ASX 200 futures are currently up 6 points.

Today's data releases:  AUS Labour force March; AUS unemployment rate; AUS employment participation rate; UK retail sales March; US retail sales March; Philadelphia Federal Reserve index April; US Markit manufacturing and services PMI April; US leading index March; US business inventories February.

Commodities and Currencies

Oil prices slipped on Wednesday after steady economic growth in China failed to offset the effect of US government data which showed that US crude stockpiles shrank by less than what an industry report suggested on Tuesday. Brent and WTI crude prices are currently sitting at US$71.62 (-0.10%) and US$63.70 (-0.06%).

Iron ore prices are down 1.6% at US$93.23 per tonne.

The spot price of gold is currently down 0.19% at US$1274.46.

The AUD is currently marginally down 0.07% at US71.74¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.