The International Monetary Fund has today cut its growth forecasts for China for this year and next, saying stimulus efforts have so far failed to deliver the expected boost. The downgrade appears to have been factored into local sentiment, with Australian stocks hitting a fresh 14 month high in early trade. The All Ordinaries Index (XAO) is up 17.1pts or 0.4pct to 4519.1pts at lunchtime in the East.
Traders work on the floor of the New York Stock Exchange, July 22, 2010.
Financial stocks are holding up well, with the S&P/ASX 200 Financials sector firmer by 0.4pct. However it is mining stocks which are holding up the best, thanks to a rise in the iron ore price. Spot iron ore didn't trade last week due to Golden Week in China, yet rallied almost 6pct overnight to US$110.40 a tonne. Shares in Fortescue Metals Group (FMG) are up 4pct to $3.86 while Rio Tinto (RIO) is firmer by 1.7pct to $55.83. Shares in BHP Billiton (BHP) are firmer by 0.8pct to $33.53.
Elsewhere media stocks are under some pressure, with shares in NewsCorp (NWS) down 1pct to $24.88 and the Ten Network (TEN) off 2pct to $0.3975.
Despite weakness in offshore markets the Aussie dollar has lifted from a three month low against US currency and is back above US102c. The Aussie dollar is being well supported following the first Eurozone Finance Ministers meeting of the European Stability Mechanism or bailout fund in Luxembourg. At lunchtime in the East, the Aussie is buying US102.27c, £0.638 and €78.78c.
Economic data released today shows business conditions and confidence remain flat. Conditions fell 3pts in September to a reading of negative three according to the NAB survey, while confidence rose 3pts to a reading of zero.
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