The Australian share market has closed higher after disappointing Chinese inflation data fueled expectations more monetary easing was yet to come in the world’s second largest economy.
Inflation in China fell to 1.6 per cent in September, below analysts’ forecasts of about 1.7 per cent and the lowest in the world’s second-largest economy since January 2010.
China’s central bank cut short-term borrowing costs for banks, the second time in about a month, on Wednesday.
It’s also the second month for Chinese inflation to fall, and the downward trend has strengthen the prospect of more monetary easing, IG Markets chief market strategist Chris Weston said.
“The trend in Chinese inflation is lower which gives the Chinese government more scope to increase liquidity throughout the money markets,” Mr Weston said.
“As a result we are seeing bit of a boost in the Chinese equity market.
“Chinese related assets like the Aussie dollar and copper are also having a bounce as well and this seems to be giving our equity market a boost.”
Strong production reports from Rio Tinto and Whitehaven Coal helped bolster mining stocks, particularly during morning trade.
At 1615 AEDT, Rio Tinto gained 25 cents to $60.99 after the global miner’s latest production report showed it shipped a record 78 million tonnes of iron ore during the September quarter.
Whitehaven Coal was down five cents to $1.495, despite a 40 per cent increase in its quarterly coal production. In the three months to September 30, Whitehaven produced 3.288 million tonnes of coal.
BHP Billiton added 35 cents to $33.80, while Fortescue Metals shed one cent to $3.64.
Among the major banks, the Commonwealth Bank climbed $1.33 cents to $75.45, ANZ gained 22 cents to $31.37, Westpac lifted 32 cents to $32.46 and National Australia Bank was up 32 cents at $32.54.
Telstra was nine cents higher at $5.38.
KEY FACTS
* At 1615 AEDT on Wednesday, the benchmark S&P/ASX200 index was up 38.2 points, or 0.73 per cent, to 5,245.6 points.
* The broader All Ordinaries index was up 34 points, or 0.65 per cent, to 5,238 points.
* The December share price index futures contract was 50 points higher at 5,229 points, with 31,404 contracts traded.
* National turnover was 1.3 billion securities worth $4 billion.
