Australia Market gains on China PMI surprise

Australian stock market closed higher on first trading session of the week and month, Monday, 1 April 2019, as release of stronger-than-expected data from China and gains on Wall Street last Friday lifted broader investor sentiment. At closing bell, the benchmark S&P/ASX200 index rose 36.23 points, or 0.6%, at 6,216.95 points, while the broader All Ordinaries added 37.95 points, or 0.61%, at 6,299.68.

Sentiment rose after official data on Sunday showed that factory activity in China, Australia's biggest trade partner, unexpectedly grew for the first time in four months in March, soothing fears of an economic downturn. On Monday, the private-sector Caixin survey showed a similar trend.

China's official Purchasing Managers' Index, a measure of factory activity, rose to 50.5 in March from the previous month's contraction and three-year low of 49.2, according to data released by China's National Bureau of Statistics. The growth was likely driven by seasonal factors as factories ramped up production after February's Lunar New Year holidays. Factory output also grew at its fastest pace in six months in March, China's National Bureau of Statistics reported, but export orders shrank for the 10th straight month amid slowing global growth and as collateral damage in the trade spat the United States.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) came in at 50.8 for March. A reading below 50 signals contraction, while a reading above that level indicates expansion. Markit and Caixin said in a joint press release that staffing levels at factories rose in March to mark their first expansion since October 2013. Some firms also hired additional workers to support greater production and new business developments, they added. The Caixin PMI is a private survey focused on smaller businesses and offers a first glimpse into the operating environment.

Wall Street's positive performance on Friday also lent support. Wall Street rose on Friday amid signs of progress in US-China trade talks. Beijing said it would continue to suspend additional tariffs on US vehicles and auto parts after April 1 in a goodwill gesture after Washington delayed tariff hikes on Chinese imports. A delegation led by Vice-Premier Liu He will be in Washington this week for another round of talks

Shares of banks and financials were in the red, with big four banks - ANZ Banking, Commonwealth Bank, National Australia Bank and Westpac - advanced between 0.5% and 1.1%.

Shares of materials and resources inclined as Chinese iron ore futures rose sharply on Friday after Vale SA slashed its 2019 sales estimate and Rio Tinto declared force majeure on some contracts after tropical cyclone Veronica. Sector giants BHP Group and Rio Tinto firmed up 1.3% each, while Fortescue Metals Group added 4.4%. Rare earth miner Lynas Corp was among top gainers in the sub-index, inching closer to the A$2.25 per share offer from Wesfarmers Ltd, after the conglomerate's CEO said on Friday the company was still keen on the takeover.

Shares in supermarket chain Woolworths Group rose as much as 2.8% after the company said it would close 30 stores at BIG W, its loss-making discount department store chain, along with two distribution centres.

CURRENCY: The Australian dollar was up against the U.S. dollar on Monday, as demand for commodity linked units underpinned after an official survey of China's manufacturing sector, Australia's biggest trade partner, showed a return to growth in March after three consecutive months of contraction. The Australian dollar, which is a proxy for sentiment over regional trade, strengthened 0.2% to $0.7112.

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