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Data drives stocks higher despite virus risks

Data drives stocks higher despite virus risks

Better than forecast global manufacturing data lifted shares in European and US trading. Bonds and gold edged lower from recent highs, although copper continued its two-week drop and crude oil shed a further 2%. The share gains came despite news of more than 17,000 coronavirus affected patients, and 360 deaths, and is a sharp contrast to the 8% falls in mainland China indices yesterday.

Manufacturing indices for January from China, Italy, France, Germany, the UK, and the US all beat forecasts. Italy and Germany were the only countries showing contraction, and the globally co-ordinated manufacturing expansion buoyed investor optimism. The US dollar fell, although the nexus with China means the Australian and New Zealand dollrs remain under pressure.

The Reserve Bank of Australia meets this morning. Interest rate futures indicate a 20% probability of a rate cut. Concerns about the impact of bushfires and a possible slowdown in China are countermanded by rising home prices and a ten-year low for the Australian dollar. No change is the consensus of analysts.

 The Australian company reporting season gets underway with reports from Cimic, Janus Hendersen and Bunnings Retail Trust. Shopping Centres of Australia this morning reported an 18% lift in revenues due to acquisition, translating to 4.2% per unit. The solid result and purely domestic nature of the business may see SCP shares receive support today.

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