A degree of calm has returned to world stock markets, after heavy selling earlier this week. Investors have been cheered by better-than-expected trade data from China and the stabilisation of its currency. Chinese customs data revealed exports for July rose unexpectedly, growing 3.3% on-year while imports for the month fell 5.6% on-year, which left China with a trade surplus of $45.06 billion, compared to a $50.98 billion surplus in June, despite a protracted trade war with the United States.
China's consumer price index in July rose 2.8% on-year its fastest year-on-year pace since February 2018, according to data from the National Bureau of Statistics. In particular, food prices soared in July to 9.1% from a year ago, amid surging prices of pork as the country battles African swine fever. The producer price index for that period fell more than expected. It declined 0.3% year-on-year in July.
Meanwhile, the People's Bank of China's fixed its midpoint for the yuan at 7.0136 against the dollar on Friday the second time this week the benchmark rate was set weaker than 7. The onshore yuan last traded at 7.0489 against the greenback, and the offshore yuan changed hands at 7.0762 per dollar.
On Wall Street, the S&P 500 registered its largest one-day percentage gain in about two months on Thursday, with the Dow and the Nasdaq also climbing more than 1%. However, that optimism was dented by the report, which has reinforced concerns the deterioration in U.S.-China relations will place additional strain on an already fragile global economy.
Japan's economy grew much faster than expected in April-June to mark the third straight quarter of expansion, as robust private consumption and business investment offset the hit to exports from cooling global demand. Gross domestic product (GDP) grew at an annualized 1.8% in the second quarter, the Cabinet Office's preliminary data showed on Friday. It followed a revised 2.8% gain in January-March.
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Shares of IT and materials sectors improved most. Lithium miners, Orecobre (ORE) and Pilbara Minerals (PLS) were among the biggest improvers. But the best performing stock on the top 200 is building products maker, James Hardie (JHX), which was 14% higher on the release of a first quarter update. In the tech space, Afterpay Touch (APT) was 4.6% higher and Wisetech Global (WTC) grew 4.4%.
Losses were seen predominantly among the more defensive sectors of utilities, healthcare and property. Property group, Mirvac (MGR) fell 3.7% after a jump of 6.5% yesterday when it beat expectations for its full year profit results. Dexus Group (DXS) has confirmed the sale of its stake in an office tower in Sydney's CBD. The sale is expected to contribute A$34 million in pre-tax trading profits over FY20 and a further $34 million in FY21.
REA Group (REA) which owns realestate.com, announced its FY19 profit results and reported an 8% lift in revenue and earnings but headline net profit after tax (NPAT) fell 58% on previously announced impairments of A$173 million to its Asian operations. Underlying profit rose 6% overcoming weaker listings over the 12 months to June 30, especially in its largest markets of Sydney and Melbourne. REA shares were up 4%.
AMP Ltd (AMP) has resumed trade after going into a trading halt yesterday on the back of its first half earnings. Shares have picked up by 7% as the wealth manager successfully completed its A$650 million capital raising to help fund A$1.3 billion for its transformation program.
CURRENCY NEWS: The Australian dollar rose against greenback on Friday, following the RBA governor Phillip Lowe testifying before a senate committee and updating forecasts in its quarterly statement on monetary policy. The Australian dollar changed hands at $0.6807 after rising from levels below $0.678 in the previous session, as Reserve Bank of Australia governor Philip Lowe said Friday it was reasonable to expect an extended period of low interest rates.
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