What Happened Today?

Max Ludowici of 708 Capital is visiting clients today and as such is unable to produce his regular report.

By Greg Peel

It would be easy to suggest the Australian market suddenly found some renewed "risk on" enthusiasm today after the flash estimate of HSBC's Chinese manufacturing PMI came in at 50.4, suggesting the first time in thirteen months China's significant manufacturing sector has expanded, and confirming a long anticipated turnaround in the Chinese economy. It would be easy, but not true given the ASX 200 had already well-exceeded a 1% gain before the result was even released mid-session. By the close the index had actually drifted off slightly.

The lead from Wall Street last night was positive but not screamingly so, with traders deserting in the afternoon for the Thanksgiving break. No Wall Street tonight, and as good as none on the half-day Friday. The ceasefire in Gaza is good news, but this tiresome conflict can come and go without having a lot of impact on Australian stocks. Not unless the nukes come out. The Australian market sagged yesterday afternoon on news Greece had not yet been granted its bail-out tranche but there was no follow through in either Europe or the US, so there was arguably a bit of ground to recover there.

There was a bit of individual stock news about, but nothing of shock value. So why did the ASX 200 close up 43 points or 1.0% to 4413? Well a quick look at the sector break-down suggests an across the board, fairly even rally, but for utilities and healthcare (ie defensives). A quick look at some big caps shows, for example, that all of BHP Billiton ((BHP)), Commonwealth Bank ((CBA)) and Telstra ((TLS)) were up 1% or more. It seems apparent that Bridge Street opened with a recovery flourish, as hinted by a 25 point gain in the futures overnight, and ultimately the tea-leaf readers were in a lather as 4400 was breached. In between smacks of "portfolio buying", given the homogeneity.

Is the Aussie stronger? Ah yes it is, up to US$1.0383. This suggests (possible) foreign portfolio buying. Hmmm — remember that big portfolio sale that set off the post-election selling a couple of weeks ago?

Just a thought.

No Dow futures today — no Wall Street.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.