The Australian sharemarket ground out a muted response to a surprise surge in Chinese lending as earnings season enthusiasm cooled and Japanese growth fell well short of forecasts.
Miners led the charge as the S&P/ASX 200 index closed 26.6 points, or 0.5 per cent, up at 5382.9 as total new financing in China rose 17.5 per cent to 2.48 trillion yuan ($450 billion), easily beating forecasts but it was the slowest pace since June 2012.
The outlook on the earnings season, however, remains in the eye of the beholder.
Analysts and investors are content with the improved bottom line but economists and strategists, such as those from Goldman Sachs, lament the weak top line growth of just 3.1 per cent.
Chinese data lending data is often front-loaded, so the lending surge could moderate, but strategists have warned it indicates new lending remained on a diminishing path of returns.
The People’s Bank of China appeared to be keeping a tight rein on liquidity in January as rates climbed, but it still provided 800 billion yuan of new liquidity into the financial system to cool jitters ahead of the first default of a wealth management product.
“The data will continue to make the market nervous about how the economy responds to gradual policy tightening as the authorities lean against rapid credit growth,” Royal Bank of Scotland currency strategist Greg Gibbs said.
“The market will continue to maintain a degree of risk premium for a possible deeper economic downturn, and this is likely to remain a limiting factor to a rebound in global investor confidence.”
The Shanghai composite index was up 0.5 per cent at the close of the ASX.
In Tokyo the Nikkei index shrugged off poor GDP data to gain 0.2 per cent.
The Japanese economy grew just 0.3 per cent in the December, less than half the 0.7 per cent forecast.
The Australian dollar climbed US0.5¢ to US90.50¢ the US dollar lost ground against most risk assets following another round of weak US data on Friday that raised hopes the US Federal Reserve would refrain from further tapering of its bond purchases.
US industrial production fell 0.3 per cent in January, a result blamed on the cold weather, while consumer sentiment held steady.
Gold climbed $US20 to $US1326 an ounce, copper rose 0.5 per cent to $US7180 a tone and spot iron ore climbed one per cent to $US123.20 a tonne on Friday.
Commonwealth Bank analyst Steve Daghlian said the market rose for the seventh trading session in eight trading days.
“Strong gains out of US and European markets on Friday and promising economic data out of China on the weekend drove our market and pushed the mining sector up about 1.3 per cent,” Mr Daghlian said.
Stocks were also buoyed by better-than-expected domestic earnings season.
But the Commonwealth Bank took the shine off some of the gains, trading ex-dividend and closing more than two per cent lower.
“It was probably a bit quieter than it could have been,” Mr Daghlian said.
Around 50 of the companies on the ASX200 will release their earnings reports this week.
Bendigo and Adelaide Bank lifted first half cash profit to $185.9 million, although its net profit was down almost 9 per cent to $180.7 million due to one-off charges. Its shares were up six cents at $11.78.
The big four banks were mainly higher with ANZ up 28 cents at $31.62, Westpac 16 cents higher at $32.91 and National Australia Bank 63 cents better at $34.75.
But Commonwealth Bank was down $1.64, or 2.2 per cent, at $74.35.
In the mining sector, BHP Billiton is due to report its first-half results tomorrow. It was up 31 cents at $38.02, while Rio Tinto had lifted $1.64 to $69.54.
Fortescue Metals Group, which is expected to release its results on Wednesday, was up 12 cents at $5.82.
The broader All Ordinaries index was up 27.9 points, or 0.52 per cent, at 5394.8 points.
The March share price index futures contract was up 37 points at 5345 points, with 20,102 contracts traded.
National turnover was 1.9 billion securities worth $5.1 billion.