Aussie market closes near highest on Monday

It was a case of buy the rumour, sell the news as investors poured into the materials sector, following the Chinese government’s pledge for a “significant increase” in debt as it looks to kickstart its slowing economy. The benchmark ASX200 finished the session up 38.30 points, or 0.47 per cent higher at 8,252.80 as investors picked up familiar names including BHP and Rio Tinto. The broader All Ordinaries rose 38 points or 0.45 per cent to 8,529.50. Meanwhile, the Australian dollar was 67.37 US cents down 0.2 per cent at the time of writing. More sectors ended lower than higher with only materials, healthcare and financials ending the day positively, although it was enough to drag the entire ASX200 higher. Materials was the best performing sector, gaining 1.34 per cent and rebounding from its recent decline. The rise in material shares comes off the back of Chinese Finance Minister Lan Fo’an press conference on Saturday, where he announced his party was looking to raise debt nationally to spur on growth for the country. Mr Fo’an said the money raised would be used in four key areas: helping the local governments with their rising debt issues, offer subsidies to people on low incomes, support the property market and replenish state banks capital. The announcement of China’s fourth major stimulus package in the last 16 years comes as the second-largest economy in the world faces a number of challenges including deflationary pressures, falling consumer spending and confidence, as well as a struggling property market. While talk of a stimulus package excited domestic investors, Mr Fo’an did not say how much the government was going to spend to fund these initiatives. This means investors face a nervous wait to see exactly how much China will spend and whether it will have a meaningful impact on domestic and international markets. A date to see whether these intiatives will be rubber-stamped into legislation and if the additional debt will be issued is yet to be confirmed. However, markets are expecting both will happen in the coming weeks. Firetrail’s head of investment strategy Anthony Doyle said the major story on the ASX was the Chinese stimulus package. “It’s all about China and speculation about what sort of stimulus or if there will be a stimulus package announced by the authorities in due course,” Mr Doyle explained. “The ASX is doing well because resources and miners are a big part of our market, pushing the ASX to a near record high today.” Despite not saying how much the government will spend, investors in our local market took it as a sign to buy resources, with South32 and Fortescue both featuring in the top five companies bought on the ASX200. Mr Doyle noted Monday’s market movements were largely due to an improving economic backdrop. “Globally markets have soft landing expectations that are becoming more embedded with inflation falling, the US cutting rates and China looking to stimulate, so overall markets are happy to grind higher.” Mr Doyle explained. Monday’s winners were large resource companies including Regis Resources Limited and Bellevue Gold were strong performers up 6.02 and 4.41 per cent respectively. West African Resources, South32 Limited and Sandfire resources also performed strongly. On the other hand, consumer discretionary and information technology shares traded lower, with the likes of Webjet falling 35 per cent on a weaker outlook, while Tabcorp, TPG Telecom, The Star and Corporate Travel Management also saw sharp falls.