Midday: ASX spikes 0.7% on China rate cut move

Market Reports

The Australian share market spiked 0.7 per cent in the first hour of trade and has stayed strong following China’s rate cut over the weekend. In an effort to boost the economy the People’s Bank of China lowered the benchmark deposit and lending rates by 25 basis points. The local mining sector has responded by jumping to the best performer while consumer staples are still weak following Woolworths Limited (ASX:WOW) revising its growth guidance on Friday. 
 
Figures
 
The S&P/ASX 200 index has advanced 41 points to 5,969 at noon. On the futures market the SPI is 39 points higher. 
 
Economic news 
 
The Australian Industry Group’s performance of manufacturing index declined in February. The read dropped 3.6 points to 45.4, remaining under 50 which indicates contraction. 
 
TD Securities-Melbourne Institute have shown the inflation gauge was flat in February after adding 0.1 per cent over the month before. Over the year inflation lifted 1.3 per cent, under the Reserve Bank of Australia's (RBA) target of between 2 – 3 per cent.  
 
RP Data-Core Logic’s Home Value Index has shown home values gained 0.3 per cent in February across metropolitan areas. Sydney’s home values lifted 1.4 per cent but Melbourne’s firmed just 0.2 per cent. Prices in Perth, Brisbane and Hobart dropped last month.
 
The Housing Industry Association has shown new home sales rose 1.8 per cent in January. HIA says there is an upward trend evident for multi-unit sales but sales for detached houses are essentially flat-lining. 
 
The Australian Bureau of Statistics reports company profits defied expectations for a rise and eased 0.2 per cent in the fourth quarter last year after gaining 0.5 per cent in the third quarter. 
 
Company news 
 
BHP Billiton Limited (ASX:BHP) has inked an offtake deal with nickel miner Sirius Resources NL (ASX:SIR). Under the deal Sirius will supply half of its forecast nickel concentrate produced from its Nova mine to BHP’s Nickel West business for three years from next year. While the financial details of the deal have not been disclosed Sirius chief Mark Bennett has described the arrangement as attractive. Shares in Sirius Resources have dropped about 6 per cent following the announcement and also an exploration update for its Baloo gold deposit. Shares in BHP Billiton have gained 1.34 per cent and are trading at $34.10. 
 
Vocation Limited (ASX:VET) has widened its interim loss after booking $241 million in impairments, partly due to its Victorian businesses. The education and training services provider booked a net loss of $273 million in the first half of the 2015 financial year. Outgoing CEO and Managing Director Mark Hutchinson says the company’s core business continues to trade satisfactorily despite difficult trading conditions and substantial reputational damage to parts of the Vocational Education business. Vocation flagged the loss last month and said it is considering all options including mergers, divestments and recapitalisation. Shares Vocation have retreated 5.56 per cent and are trading at $0.09. 
 
Best and worst performers
 
Most sectors are trading higher: The best performing sector is materials, gaining 1.3 per cent to 9,951. Shares in Iluka Resources Limited (ASX:ILU) have risen 4.83 per cent and trading at $8.24. Shares in Orica Limited (ASX:ORI) and Amcor Limited (ASX:AMC) are also stronger. 
 
The only sector trading lower is consumer staples, falling 1.7 per cent to 9,334. Shares in Metcash Limited (ASX:MTS) have eased 4.14 per cent, trading at $1.51. Shares in Woolworths Limited (ASX:WOW) and Asaleo Care Limited (ASX:AHY) are also lower. 
 
Gold and the dollar
 
Gold is buying $US1,216 an ounce. 
The Australian dollar is buying $US0.7783.