Asian markets a bit mixed as Australian bourse powers higher

<p>The Chinese stock market extended its losses into a third trading day on fears that tightening monetary policy might hurt company earnings growth. The Shanghai […]</p>

The Chinese stock market extended its losses into a third trading day on fears that tightening monetary policy might hurt company earnings growth. The Shanghai share index fell 17 point to 2,980, below the important 3,000 mark. Basic material and consumer goods sectors led the fall. Chinese rare earth producer Inner Mongolia Baotou (600111.CH) reported higher than expected third quarter earnings and also raised its full year net profit forecast by 1200%. The company share price has increased by 252% this year and remains in an upward trend.

In Hong Kong, the Hang Seng index closed slightly higher, up 61 points to 23,225, shrugging off weak leads from Wall Street and the Chinese mainland stock market. Retail giant Li & Fung traded 2.48% higher on the day, and was one of the most actively traded stocks, as investors were encouraged by the announcement that Christmas orders in the US are significantly higher compared with last year. Chinese banks and insurers listed in HK also traded higher, helping to lift the index. China Coal company (1898.HK) lost 2.69% in the early trading session despite a reported 14.2% increase in third quarter net profits. The share price rallied nearly 50% and today’s move appeared to be profit taking.

The Australian share market powered ahead today (+37 to 4,685), fuelled by another strong banking result and substantial index buying. ANZ Bank (+69 c to $24.73) released a better than 50% profit increase for the year, and the big four banks led the market higher in the morning session. Although initially languishing, resource share prices turned and moved higher in concert with the Australian dollar (+0.0041 to 0.9760). In this respect, the sector and the market continued this week’s pattern of Asian markets ignoring overnight action and setting the trend for the global trading day.

Volume in index futures was well above average, in contrast to individual stock volumes, which were light. This suggests involvement from larger institutions, as both buyers and sellers, reflecting current market disagreement about the likely size and effect of QE2 on asset prices. Outside finance, sectoral trends were harder to detect. While the tone is generally positive, diverse names like Harvey Norman (-5c to $3.38), Fortescue (-11c to $6.17) and Coal and Allied (-$1.11 to $112) are all in the red. Arafura Resources (-2c to $1.40) fluctuated through a ten percent range after announcing a placement to further advance its rare earth project.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.