Bargain hunters lifted the Australian sharemarket out of an early dip into the red, with sentiment buoyed by a surge in China’s trade surplus.
The S&P/ASX 200 index gained 14.2 points, or 0.28 per cent, to 5123.4 points, but its performance was outstripped by a one per cent rally in the small ordinaries index which has lagged the blue chip index for the past 15 months.
China’s trade surplus of $US15.2 billion was more than three times bigger than the forecast deficit of $US6.9 billion as exports jumped 21.8 per cent and imports slumped 15.2 per cent, but analysts cautioned the data was distorted by the shift in the Lunar New Year to February this year.
Using a two month average to smooth the data, imports growth slowed to 5 per cent compared to 7.9 per cent in 2012, while exports increased 23.6 per cent against 6.8 per cent in 2012.
“While the strong performance from exporters is reassuring, the weak performance from importers is concerning, especially given Beijing’s push from an import driven economy fuelled by domestic demand,” Forex.com analyst Chris Tedder said.
“However, we have to assess whether the low imports figure is due to weak demand or falling prices.”
The Australian dollar rallied overnight to $US1.0270 as the euro surged on the ECB’s decision, but it slipped back to $US1.0240 after the Chinese import data was reassessed and the US dollar pared losses against major currencies.
Australian government bond yields rose across the curve from one year to 15-years, with 10-years climbing 10.9 points to 3.551 per cent.
Explaining the easing of dollar strength, Bloomberg reported that small Japanese investors, referred to as “Mrs Watanabe” in financial markets, had deserted the Australian bond market for the third straight month, selling 439.3 billion yen’s worth ($4.6 billion) in January.
The Shanghai composite index was off 0.2 per cent at the close of the ASX and in Tokyo the Nikkei index jumped 2.2 per cent as the yen weakened and December-quarter GDP growth was revised up to 0.2 per cent from minus 0.4 per cent.
Overnight sentiment was steady, with offshore markets edging higher, but gains were pared after the European Central Bank left interest rates on hold and ruled out any immediate monetary relief for the eurozone.
The Dow Jones industrial index reached a fresh record high after weekly jobless claims to the lowest average level in five-years, with attention now on the monthly employment data which could provide clues to when the US Federal Reserve might begin scaling back its bond purchasing programme.
Yesterday spot iron ore rose 0.3 per cent to $US146.30 a tonne, while Shanghai rebar futures reversed a 1.1per cent drop today to a two-month low.
Copper was little changed at $US7765 a tonne after Chinese imports fell to the lowest level in 20-months and stockpiles reached a one-year high.
Gold slipped $US5 to $US1576 an ounce.
The broader All Ordinaries index was up 14.4 points, or 0.28 per cent, at 5137.5. On the ASX 24, the March share price index futures contract was 11 points higher at 5122, with 20,941 contracts traded.
IG Markets analyst Stan Shamu said the local bourse narrowly missed posting a fresh four-year high, despite a late rally on the back of a surge in China’s exports.
“The morning was fairly flat ahead of China data which eventually came out and smashed expectations,” Mr Shamu said.
“It certainly seems like things are ticking along in China. The big miners were really firing.”
China’s exports surged more than 20 percent in February, data showed, in another sign of recovery for the world’s second-largest economy.
Iron-ore focused miners Rio Tinto and Fortescue Metals Group both recorded gains, with Rio lifting $1.13 to $64.36 and Fortescue up two cents higher to $4.42.
Global miner BHP Billiton was 27 cents higher at $36.09 while mining services company Boart Longyear rose five cents to $1.47.
Among the major banks, Commonwealth rose 15 cents to $69.83, National Australia Bank rose four cents to $31.10, ANZ added 11 cents to $29.12, and Westpac dipped four cents to $31.25.
Leighton Holdings was seven cents higher at $22.04 after its contract and project development subsidiary snared a $120 million deal to work on a major rail extension in Sydney.
Woodside Petroleum shares were five cents higher at $37.14 after the company played down suggestions that its gas project in Israel is under threat as it faces regulatory hurdles.
Virgin Australia hovered at 40.5 cents after the competition watchdog delayed its decision on the airline’s proposed takeover of Tiger Airways Australia.National turnover was 1.8 billion securities worth $3.8 billion, with 555 stocks up, 430 down and 389 unchanged.
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