SYDNEY/WELLINGTON, July 24: Australian shares were knocked from two-month highs on Wednesday as signs of a further slowdown in China’s manufacturing sector renewed concerns about the strength of demand in Australia’s largest export market.
Miners had underpinned the market’s early rise of as much as 0.7 percent after copper prices held steady and gold rose to a one-month high. Global miners BHP Billiton Ltd rose 0.6 percent and Rio Tinto Ltd put on 1.6 percent. Top gold miner Newcrest Mining Ltd climbed 1.4 percent.
But the market trimmed gains after a preliminary survey showed activity in China’s manufacturing sector slowed to an 11-month low in July as new orders faltered and the job market darkened.
By 0209 GMT, The S&P/ASX 200 index was up 0.3 percent or 16.3 points at 5,033.4. The index rose 0.3 percent on Tuesday.
Australia’s consumer price index rose a modest 0.4 percent in the June quarter, but key measures of underlying inflation were a touch higher than expected and taken as lessening the chance of a cut in interest rates next month.
‘It’s basically a mixed bag,’ said Tom Kennedy, an economist at JP Morgan.
‘It is in that realm where people’s preconceived ideas are probably still going to hold, and you really have seen that in market pricing at the moment.’
Markets are currently pricing in a 55 percent chance of a rate cut in August.
Westpac Banking Corp added 0.8 percent and top lender the Commonwealth Bank of Australia rose 0.7 percent.
Elsewhere, defensives were trading lower. Blood products maker CSL Ltd lost 0.7 and QBE Insurance Group Ltd shed 1.3 percent. Utility provider Origin Energy Ltd slipped 0.3 percent.
In the United States, the S&P 500 snapped a four-day winning streak on Tuesday and pulled back from Monday’s record closing high, while the Dow ended slightly stronger.
New Zealand’s benchmark NZX 50 index rose 0.1 percent or 4.2 points to 4,584.8.
STOCKS ON THE MOVE
* Atlas Iron Ltd soared 5.4 percent to A$0.88 after its June quarter output rose 16 percent.
(0206 GMT)
* SFG Australia Ltd surged 5.3 percent to seven-week highs of A$0.70. It said it has appointed advisors to review potential opportunities in the financial services sector.
(0207 GMT)
* Shares in small New Zealand milk processor Synlait Milk Ltd extended gains into a second day, after a rising nearly 25 percent in its market debut on Tuesday.
The tightly held company, dominated by foreign investors, was up 4.7 percent at NZ$2.87, having peaked at NZ$2.90.
(agencies)
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