Investors have started the new year in as ebullient a mood as they ended the last one in, driving the local sharemarket to its highest close since June 2015.
Buoyed by strong Chinese manufacturing data that indicated the economic rebound in Australia’s main trading partner remains intact, the benchmark S&P/ASX 200 index added 1.2 per cent to 5733.2 points, outpacing gains on other regional bourses.
The data also sparked gains in the Australian dollar, which was up half a cent at US72.30¢ in late trade.
On the sharemarket, the euphoria was broad-based, with all sectors advancing significantly for the day, albeit on low trading volumes with many professional traders still on holiday.
“It appears the bears are still in hibernation. Any signs of positivity such as today’s Chinese manufacturing PMI overshoot are creating exaggerated moves to the upside,” said Atlantic Pacific Securities client adviser Gary Huxtable.
Banks led the local gainers, with ANZ rallying 1.7 per cent after it announced the sale of its stake in Shanghai Rural Commercial Bank for $1.8 billion, which is expected to increase the bank’s Tier 1 capital ratio by around 40 basis points.
“Investors are ignoring some of the macroeconomic factors which have favoured the likes of financials over bond proxies over the last few months,” Mr Huxtable said, referring to the surge in bond yields over the past months as global markets brace for rising inflation and more Federal Reserve rate hikes. “Equity markets are the real winners at the moment.”
The strong Chinese data also contributed to a rally in the big miners, with BHP Billiton and Rio Tinto rising 1.6 per cent and 1.8 per cent, respectively.
Gold stocks were among the main losers of the session, despite a strong Asian session for the precious metal, which was up 0.9 per cent to $US1157 an ounce on its first trading day of the year. But losses on the last day of 2016 weighed on miners such as Evolution Mining, which fell 1.9 per cent.
In other news, Bubs Australia became the latest maker of infant formula to hit the sharemarket, rising more than 100 per cent to 13.5 cents in its debut following a backdoor listing. Like its competitors a2 Milk and Bellamy’s, Bubs is targeting Asian and in particular Chinese customers.