The Australian market turned on its head today, first steeply falling in the morning and then recovering to close up almost one percentage point.
The ASX was pulled down about one half of a percentage point by the price of iron ore slipping below US $80 a tonne which hit the share prices of exporting miners.
And then the market jumped back up on good news in the form of positive manufacturing numbers form China, indicating continuing demand for Australia’s miners.
The S&P/ASX 200 was up 0.98% to 5,415.70.
Eamonn Sheridan at ForexLive also highlighted that Moody’s had said earlier in the day the Australian government’s overall financial strength is high compared to most AAA-rated countries. They also noted a high level of economic resilience was also important to local traders.
The Australian dollar received a boost, firming about half a cent to be trading around 0.8910 against the USD.
Stocks have been under intense pressure over the past couple of weeks and this combination of news has clearly given the buyers the upper hand.
It also highlights that China, and expectations about the country’s path of growth, remains a key driver of the Australian dollar and equities.
Resources stocks, which rely on iron ore prices for top line revenue, weighed on the market but firmed later in the day on the China news.
BHP had been down 1.32% early in the day but closed up 0.26% to $34.95.
Rio Tinto had lost 0.73% in the morning but closed up 0.25% to $60.20.
However, Fortescue Metals, with its heavy reliance on iron ore sales to China, closed down 2.23% to $3.66.
Westpac was up 1.14% to $32.77, Commonwealth 1.1% to $77.30, the NAB 1.12% to $33.51 and the ANZ Bank 1.4% to $31.65.
Adventure clothing retailer Kathmandu was marked down 1.74% to $2.82 on the back of a lower than expected net profit for the full year to the end of July.