Australia Market extends gains on upbeat construction, service data

The Australian market finished higher for second straight session on Wednesday, 07 April 2021, on strengthening economic recovery hopes after better than expected construction sector and service sector activity reports. Meanwhile, upward revision of the world economy to 6% by the International Monetary Fund also supported market rally.

At closing bell, the benchmark S&P/ASX200 was up 42.16 points, or 0.61%, to 6,928.02. The broader All Ordinaries added 43.53 points, or 0.61%, to 7,177.44.

The International Monetary Fund expects world economic growth at 6% in 2021, up from a January prediction of 5.5%. The IMF expects the US economy to grow by 6.4% in 2021, up by 1.3 percentage points from the IMF's 5.1% 2021 projection in late January and nearly double the rate it estimated last October 2020. IMF Chief Economist Gita Gopinath said the improvement was largely due to increased fiscal support, including a new $1.9 trillion U.S. aid package, accelerated vaccinations and continued adaptation of economic activity to overcome pandemic restrictions. However, she warned that the pandemic was still far from defeated and coronavirus cases were still rising in many countries.

China's growth forecast for 2021 was raised by 0.3 percentage point to 8.4%, an increase that Gopinath said largely reflected external demand for Chinese exports, driven largely by the U.S. stimulus spending. But she said that consumer spending in China was still lagging, and growth was primarily being driven by public investments.

All sectors finished in the green with energy, property and IT leading, up 1.4%, 1.22% and 1% respectively. Industrials, financials and telecom were the worst performers, up 0.3%, 0.4% and 0.4% respectively.

In company news, Resolute Mining (RSG) rallied after upgrading its projected production and expected costs at its Syama gold mine in Mali through to 2029.

ECONOMIC NEWS: Australia AiG Construction Sector Expands In March- Australia construction sector in Australia continued to expand in March, with a seasonally adjusted Performance of Construction Index score of 61.8, the latest survey from the Australian Industry Group showed on Wednesday. That's up from 57.4 in February and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. The indexes for new orders, employment and supplier deliveries all hit record highs, as house builders nationwide scrambled to commence residential projects as soon as possible in order to meet the final Home Builder deadline. Capacity utilization surged up to 81.3 percent in March, towards its recent high in December.

Further, the latest survey from Markit Economics revealed on Wednesday with a services PMI score of 55.5. That's up from 53.4 in February, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that its composite index climbed to 55.5 in March as well - up from 53.7 a month earlier.

CURRENCY NEWS: The Australian dollar traded down by 0.43% at $0.7632.

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