australian stocks lift off their lows following chinese gdp data but close flat 906672015

The Australian share market plunged at the open Tuesday but managed to close flat after buying emerged in afternoon trading. The global markets decided that Chinese economic data was not so bad after all, even though GDP growth of 7.4 per cent in 2014 was the slowest seen since 1990. Analysts had forecast a GDP growth of 7.3 per cent. It is worth noting that China’s economy had grown at an average rate of over 10 per cent for 30 years until 2010 and clocked 7.7 per cent growth during each of 2012 and 2013.

The S&P/ASX 200 closed at 5,307.7 with a loss of only 1.4 points, while the broader All Ordinaries index ended the day at 5,286.8, losing 2.2 points.

Significant moves were seen only in the energy and information technology sectors which lost 3.3 per cent and 1.3 per cent respectively.

Banks were a firm feature as Commonwealth Bank of Australia (ASX:CBA) gained 0.5 per cent to AU$83.5, Westpac Banking Corp (ASX:WBC) was up 0.8 per cent to AU$32.89, Australia and New Zealand Banking Group (ASX:ANZ) rose 0.7 per cent to AU$31.51 and National Australia Bank Ltd (ASX:NAB) ended higher by 0.7 per cent to AU$33.56. Macquarie Group Ltd (ASX:MQG) ended with gains for the second day, closing up 2.66 per cent at AU$59.0, as it continued to ride the momentum from its earnings upgrade.

Amongst energy stocks, Woodside Petroleum Ltd (ASX:WPL) slumped 5.62 per cent to AU$32.25, Santos Ltd (ASX:STO) fell 1.99 per cent to AU$7.39 and Oil Search Ltd (ASX:OSH) ended lower by 0.13 per cent at AU$7.48, as US crude prices remained weak for the third successive trading session. Oil exposed miner BHP Billiton Ltd (ASX:BHP) has scaled back operations in its US shale division due to the oil price slump, reported The Sydney Morning Herald. It also warned that rig numbers could decline by as much as 40 per cent by June 30, and that the division could be subjected to impairment charges of up to US$250 million.

Rio Tinto Ltd (ASX:RIO), which declared production highlights for 2014 on Monday, said it will likely increase its iron ore production by 18 per cent in 2015 to 330 million tonnes, rising to about 360 million tonnes by 2017. During 2014 the company produced a record 295.4 million tonnes of iron ore and shipped a record 302.6 million tonnes at a realisation of US$84.3 per tonne. Falling commodity prices, particularly of iron ore, raise a question mark on Rio’s ability to maintain the progressive dividend increases it has promised. “In our view, Rio will lift the progressive dividend by 15 per cent and conduct an on-market buyback in London,” UBS analyst Glyn Lawcock said, however, as reported by The Australian.

Shares in Rio Tinto were down 0.87 per cent to AU$53.69, BHP Billiton Ltd (ASX:BHP) was lower by 0.83 per cent to AU$27.48, though Atlas Iron Ltd (ASX:AGO) was off sharply by 5.26 per cent to AU$0.180. Fortescue Metals Group Ltd (ASX:FMG), however, gained 2.19 per cent to AU$2.33.

Chinese conglomerate and iron ore producer Citic cautioned investors that its 2014 profit would be lower due to an impairment charge of between US$1.4 billion to US$1.8 billion taken on its Australian Sino Iron mining project, which was hit by the crash in iron ore prices. The Australian reported that iron ore prices were down again in overnight trading to US$67.40 per tonne, apparently because China’s growth numbers failed to impress investors.

Amongst resource stocks, gold miners figured prominently in the best gainers list for the day. Sirius Resources N.L. (ASX:SIR) was the top gainer on the S&P/ASX 200, ending 8.66 per cent higher at AU$2.50, after the company reported encouraging results from new gold drilling in Western Australia, according to the Sydney morning Herald. Northern Star Resources Ltd (ASX:NST) jumped 7.16 per cent to AU$2.02. The gold price has shot up from a low of US$1,131 touched on November 7 to nearly US$1,294 in overnight trade.

Shares in appliance maker GUD Holdings Limited (ASX:GUD) surged 5.59 per cent yesterday after the company reported that profit jumped 16 per cent during the six months ended December 31, though revenue during the period was lower by 0.4 per cent to AU$297.1 million, according to The Australian. Flagship brands Sunbeam, Dexion, and Davey turned in a good performance as they benefited from a restructuring that controlled costs and improved logistics.

The International Monetary Fund lowered its forecast for global economic growth in 2015 to 3.5 per cent, down by 0.3 per cent from its October forecast, according to Reuters. The IMF said governments and central banks should pursue reforms and follow accommodative monetary policies to boost economic growth.

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