Taking cues from Wall Street where stock prices rallied overnight on better-than-expected economic data, the Australian stock market opened on a bright note on Thursday and is currently trading firm, with energy and materials stocks recording strong gains.
The benchmark Australian index S&P/ASX 200, which moved on 3,931 after opening near 3,890, is currently trading at 3,918, up 51 points over its previous close. The All Ordinaries index is up 52 points at 3,892.
In the energy space, Worleyparsons is trading 4.5% up, Woodside Petroleum is up 3% and Origin Energy is trading higher by 2.3%.
Among materials, BHP Billiton and Rio Tinto are up 3.4% and 3.6% respectively while Orica is trading with a gain of 6.4%. Utilities stock AGL Energy is up 1.8% over its previous close.
Capital goods issue Leighton Holdings is trading over 3% up. Media stock Newscorp is gaining 7.6%. In the banking sector, National Bank is up 1.6% and Commonwealth Bank of Australia is trading 1% up, while ANZ Bank is down marginally. Diversified financials stock Macquarie Group is up 2.1% and insurance stock QBE Insurance is trading with a 3% gain.
In the currency market, the Australian dollar is trading at 0.7474 to the U.S. dollar.
On the economic front, the Australian Bureau of Statistics will come out with the monthly Employment Change and Unemployment Rate reports today.
Among other markets in the Asia-Pacific region, New Zealand is trading firm, with its benchmark NZX 50 gaining 35 points or 1.23%. Korea is also trading firm. The Japanese market which has resumed trading after remaining closed for three days, is up sharply. The Nikkei 225 index is up 4.2% or 376 points at 9,354 at present.
The stock markets across the Asia-Pacific region closed mostly higher on Wednesday, although the Japanese market remained closed for the third straight day. Hong Kong's Hang Seng Index jumped 2.5 percent.
The European markets also moved higher, benefiting from the U.S. employment data. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index advanced 1.8 percent and 0.6 percent, respectively.
Wall Street had a pretty good session on Wednesday despite some profit taking during the course of the day. Market sentiment was fairly upbeat thanks to better-than-expected economic data. Market also reacted positively to reports suggesting that several of the financial companies examined by the government don't need additional capital.
According to the latest ADP Employment Report, 491,000 jobs were cut from private payrolls in April, but it turned out to be better than the 645,000 job cuts economists were expecting. And, the figure is substantially down from the 708,000 job losses recorded for March. While the data points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and generated some optimism about the Labor Department's monthly employment report due to be released on Friday.
In an interview with RTT News, Peter Cardillo, chief market economist at Avalon Partners, said that the ADP employment data signals that the Labor Department's monthly employment report will probably show a decrease of less than 500,000 jobs.
According to media reports, the government stress tests of the nation's leading financial firms have determined that JP Morgan, Goldman Sachs, American Express and Bank of New York Mellon will not need additional capital. At the same time, reports have suggested that Bank of America, Citigroup and Wells Fargo will be asked to raise additional capital.
While the official results are not due to be released until after the close of trading on Thursday, the leaks generated some optimism about the outlook for the financial sector.
With the economy showing signs of a speedy recovery, investors are turning to stocks once again. Recent data shows that sequential inflow of funds into mutual fund assets on a percentage basis was the biggest in absolute terms in almost a year.
While the Nasdaq underperformed the Dow and the S&P 500 by a wide margin, the major averages all closed firmly positive. The Dow closed up 101.63 points or 1.2 percent at 8,512.28, the Nasdaq closed up 4.98 points or 0.3 percent at 1,759.10 and the S&P 500 closed up 15.73 points or 1.7 percent at 919.53.
Crude oil prices advanced 4.6% to settle at a five-month closing high of $56.34 per barrel.
While some traders are likely to stay on the sidelines Thursday ahead of the release of the results of the government's stress tests, trading could be impacted by the release of Labor Department reports on weekly jobless claims and first-quarter labor productivity and costs.
Traders will also be digesting the release of quarterly results from Cisco, News Corp. and Prudential after the close of trading Wednesday. Additionally, General Motors is due to release its quarterly results before the start of trading on Thursday.
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