The Australian sharemarket bounced today but metals, currency and credit markets failed to match the optimism in equities as Chinese borrowing costs continued to climb and the yuan traded at one-year lows.
The S&P/ASX 200 index struggled in the early session but ramped to close 44.1 points, or 0.83 per cent, up at 5338.1 with a heavy surge at the finish as tracking fund managers adjusted for the quarterly index reshuffling.
Overnight sentiment was boosted by a bounce in the Philadelphia Fed in index, but investors ignored the ongoing signs of weakness in the interest rate sensitive US housing market.
US existing home sales fell 0.4 per cent, the sixth drop in seven months since US Federal Reserve hinted at tapering its bond purchases, but markets remain sceptical the Fed will plough on with further stimulus cuts if the data deteriorates much further.
The Shanghai composite rallied from the red to trade 0.7 per cent up at the close of the ASX despite the Chinese Beige book business survey showing the world's second biggest economy had slowed this quarter. The rally in China was dominated by energy giant PetroChina which beating earnings forecasts.
Foreign investors sold a record $US1.5 billion in Chinese equities in the week until Thursday, while global emerging markets saw $US4.1 billion of outflows and Japan $US10 billion. US markets absorbed the bulk as $US10.5 billion flowed into US equities and $US3.7 billion into bonds.
Japanese markets were closed for a public holiday.
The Australian dollar rose US0.4Â¢ to US90.60Â¢ while government 10-year yields edged up 2.5 points to 4.153 per cent
Gold bounced $US10 from its overnight low to $US1333, copper slumped 1.9 per cent to $US6430 a tonne and spot iron ore was marginally firmer at $US110.70 a tonne.
More to come