By Robb M. Stewart
MELBOURNE, Australia--Australian shares rebounded strongly
Tuesday after better-than-anticipated Chinese manufacturing data
helped ease some concerns about sluggish growth in the world's
second-biggest economy and Australia's largest trading partner.
The HSBC flash manufacturing purchasing managers index for China
came in at 50.5 for September, a modest rise from 50.2 the month
before but ahead of some forecasts including from ANZ Bank which
had expected the gauge of nationwide manufacturing activity to slip
back into contraction territory--below 50--for the first time since
May.
"The Chinese release appeared to flip broader sentiment to the
upside. Some of the big yield stocks, including the banks and
telcos, rallied with gusto," said William Leys, a sales trader at
CMC Markets in Sydney.
The S&P/ASX 200 ended the day up 52.7 points, or 1%, at
5415.7. That marked a strong rebound for the index, after falling
as much as 25 points early in the day to build on Monday's 1.3%
fall and briefly erasing all gains made so far in 2014.
Most sectors of the market managed to finish higher for the day,
led by the banks and helped by miners that had been under pressure
earlier after the spot market price of iron ore, Australia's
biggest export to China, fell to a fresh five-year low of US$79.80
a metric ton.
"Today's gains are primarily in the banks, which had started to
appear oversold on most metrics," Stan Shamu, a market strategist
at IG in Melbourne, said. "However, given the yield trade seems to
have run its course, it will be interesting to see if this recovery
has legs."
Commonwealth Bank of Australia and Westpac Banking both advanced
1.1%, while National Australia Bank rose 1.2% and Australia &
New Zealand Banking climbed 1.4%.
The major iron-ore producers also gained, with BHP Billiton and
Rio Tinto up 0.3% and Fortescue Metals Group 2.2% stronger. Still,
smaller producers including BC Iron and Atlas Iron continued to
slide, ending down 1.1% and 4.7%.
Nufarm rallied more than 12% after the fertilizer company
forecast a rise in underlying earnings this fiscal year following a
53% drop in net profit in the year through July thanks to
restructuring charges for closing factories.
Write to Robb M. Stewart at robb.stewart@wsj.com