Upbeat manufacturing data out of China allayed expected caution from local investors amidst a slew of economic data to see the Australian share market open stronger. Local stocks are 1 per cent stronger at midday and on the rise, with the energy sector leading gains at this stage. Billabong stocks have surged on news of a new New York based investor mustering an attempt to oust the board.
The S&P/ASX 200 index is 46 points up at 5,181. On the futures market the SPI is 59 points higher.
Economic news
The Australian Industry Group says manufacturing activity in Australia fell for the 26th consecutive month in August, however the rate of decline is slowing. The AIG Performance of Manufacturing Index (PMI) was 46.4 in August, up 4.4 points from July. Manufacturing hasn't posted a monthly rise since June 2011, and the latest sub 50 result marks not only ongoing contraction in the index but also the longest period of contraction in the index’s 21-year history.
TD Securities and the Melbourne Institute’s monthly inflation gauge has indicated a snail paced slowing in the rate of inflation in August, leaving the door open for the RBA to deliver a further rate cut when it convenes next Tuesday. The gauge was 0.1 per cent in August, coming off a 0.5 per cent increase in July and a flat result in June. The annual rate to August was 2.1 per cent, down from 2.7 per cent in July.
The Australian Bureau of Statistics (ABS) says building approvals increased 10.8 per cent to 14,304 in July, exceeding the expectations of analysts. The result is up from 12,778 approvals in June, and well ahead of Bloomberg economist estimates of a 4 per cent rise. Over the year to July, building approvals are up 28.3 per cent.
Also from the ABS, business indicators for the June quarter are out, showing a 0.8 per cent fall in company gross operating profits. Reuters poll forecasts had been for a 0.7 per cent rise. Estimated business inventories meanwhile rose 0.2 per cent in the quarter, slightly ahead of expectations.
Company news
Rio Tinto Limited
(ASX:RIO) has loaded the first shipment of iron ore from its expanded port, rail and mine operations in Western Australia, the largest integrated mining project in the country. The milestone marks the commencement of commissioning of the expansion programme, which will see overall capacity for Rio’s WA operations increase to 290 million tonnes annually. Shares in Rio Tinto are trading up 2.2 per cent at $59.58.
Transfield Services Limited
(ASX:TSE) has elected independent non-executive Director Diane Smith Gander to succeed outgoing Chairman of the board Tony Shepherd. Smith Gander also holds non-executive directorships on the boards of Wesfarmers Limited
(ASX:WES) and CBH Group, as well as being a Commissioner of Tourism Western Australia. Mr Shepherd says the appointment is ideal and Smith Gander will aptly continue to oversee the board’s turnaround of Transfield. Shares in Transfield are trading up 4.37 per cent at $1.20.
Best and worst performers The best performing sector is Energy gaining 158 points to 13,928. Shares in Paladin Energy Limited
(ASX:PDN) have risen 6.25 per cent and trading at $0.95. Shares in Karoon Gas Australia Limited
(ASX:KAR) and Caltex Australia Limited
(ASX:CTX) are also stronger.
The worst performing sector is Utilities, falling 23 points to 5,453. Shares in AGL Energy Limited
(ASX:AGK) have fallen 1.43 per cent, trading at $15.53. Shares in Energy World Corporation Limited
(ASX:EWC) are lower while SP Ausnet
(ASX:SPN) is flat at midday.
Gold and the dollar
Gold is trading at $US1,390 an ounce and the Australian dollar is buying $US0.8968.
