Dismal data from China, Japan, Europe and the US yesterday sparked another reach for yield and a bounce on the Australian sharemarket today.
Following the 0.7 per cent rally on Wall Street last night, the S&P/ASX 200 index climbed 33.8 points, or 0.61 per cent, to 5548.5 as bargain hunters dived back into high-yielding defensive stocks.
Miners lagged, however, after metal and iron ore prices were among the few assets to signal distress over the plunge in China’s lending last month and slump in Japanese GDP.
Shortly before the market close Germany confirmed the increasingly dire situation in Europe after its economy shrank 0.2 per cent in the June-quarter, worse than the 0.1 per cent forecast and well off the 0.7 per cent increase in the March-quarter.
Last night stocks rallied after flat US July retail sales growth and a 0.3 per cent drop in eurozone June industrial production raised expectations a rise in US interest rates would be delayed and the European Central Bank would soon be forced to embark on quantitative easing and further rate cuts.
The Australian dollar was steady at US92.90¢ while government 10-year yields fell 6.2 points to 3.391 per cent as stimulus and rate cut hopes from around the world drove bonds lower.
US 10-year yields dropped 2 points to 2.43 per cent.
The Shanghai composite index was marginally lower at the close of the ASX as some economists and the People’s Bank of China downplayed the 80 per cent slump lending data, suggesting it was because of “seasonal factors”.
“A key question is whether the sharp slowdown in total credit creation reported yesterday is payback for the recent rapid growth or a sign that financing conditions have deteriorated,” Royal Bank of Scotland currency strategist Greg Gibbs said.
“It is probably a bit of both and it will take more data to get a clearer picture.”
In Tokyo the Nikkei index was up 0.7 per cent.
Spot iron ore fell 0.8 per cent yesterday while Dalian iron ore futures were off 1.2 per cent today.
Copper tumbled 1.1 per cent to a two-month low of $US6885 a tonne and gold rose $US4 to $US1313 an ounce.
Local players Telstra, Crown and Fairfax all reported positive results on Thursday.
IG markets analyst Stan Shamu said the Japan and Australia sharemarkets were “flying” with gains of around 0.7 per cent today.
“The ASX 200 is being underpinned by earnings, with most of the reporting companies today impressing,” Mr Shamu said.
“Telstra has been the headline act today.”
Preliminary figures showed Telstra shares were 12 cents higher at $5.56 after the telco announced it would increase its dividend and had lifted its profit by 14 per cent.
Fairfax announced it had swung back into the black with a $224.4 million profit.
Its shares gained 5.5 cents, or 6.2 per cent, to 94 cents.
In other news, James Packer’s Crown Resorts reported a massive 65.7 per cent profit lift to $655.7 million.
Its shares gained 83 cents, or 5.6 per cent, to $15.66.
The four major banks also faired well, with Westpac up 23 cents to $33.95, NAB adding 28 cents to $34.60, ANZ flat at $32.74 and Commonwealth Bank gaining six cents to $81.02.
However, the resource sector was under pressure after iron ore prices fell overnight.
BHP Billiton fell eight cents to $38.16, Rio Tinto dropped 68 cents to $65.05 and Fortescue slipped eight cents to $4.45.
The broader All Ordinaries index was up 34.9 points, or 0.63 per cent, at 5542.8.
The September share price index futures contract was 36 points higher at 5494, with 25,262 contracts traded.
National turnover was 1.5 billion shares worth $4.2 billion.