The ASX broke out of its multi-month trading range on Monday as mining stocks sizzled on more indications that the Chinese economy remains robust.
The benchmark S&P/ASX 200 index advanced 33 points or 0.6 per cent to 5847, while the All Ordinaries index rose 32 points, 0.6 per cent, to 5917. Monday's gains extended a winning streak that started the Friday before last.
The ASX 200 has spent more than 100 sessions trapped between 5650 and 5850, but the benchmark measure pushed above that upper limit on Monday before settling slightly below.
"We have broken out of that trading range and that tells you the bulls are in control," IG strategist Chris Weston said The question now, he said, was whether the sharemarket can push meaningfully higher from here.
"What is really important for global equities is that real [after inflation] bond yields don't go up too far."
Australian 10-year bond yields were trading at 2.75 per cent on Monday, around where they started the year.
On the ASX, resources jumped from the open and continued to rally through the day, with the sector buoyed by a sharp rise in the spot iron ore price on Friday night. Iron ore was at $US62.53 a tonne and Chinese iron ore futures were up another 2 per cent on Monday.
BHP added 2.2 per cent, while Rio Tinto climbed 3.4 per cent and Fortescue shares 1 per cent.
Outside the majors, gold miner Evolution advanced 1.8 per cent after telling the market it lifted production and cut costs in the September quarter.
OZ Minerals rose 1.5 per cent after revealing it would wait before striking deals for its two copper mines.
The move for iron ore followed data on Friday showing China's imports rose by a stronger-than-expected 18.7 per cent in September, with iron ore volumes hitting a record.
Another surprise for markets followed on Monday, when data showed producer prices jumped 6.9 per cent in September.
Adding to comfort around expectations for the Chinese economy, PBOC Governor Zhou Xiaochuan over the weekend gave an uncharacteristically explicit growth forecast.
"China's economic growth has slowed over the past few years ... but economic growth has rebounded this year, with GDP reaching 6.9 percent in the first half, and may achieve 7 per cent in the second half," Zhou was quoted as saying at the G30 International Banking Seminar in Washington.
In the energy sector, Origin Energy gained 2.5 per cent and Beach Energy jumped 5.5 per cent as crude oil prices rallied for a second session. Banks climbed as well, providing a solid foundation for the ASX's gains on Monday.
Shares in the listed sky diving group Skydive the Beach Group lost 7.7 per cent after a triple fatality on Friday at its Mission Beach operation.
STOCK WATCH
Thorn Group
Shares in consumer finance firm Thorn Group crashed 22 per cent to 91 cents on Monday after the company warned that profits this financial year would be 30 per cent below the prior period.
In an ASX release, the firm said it expects its half-year net profit to be around $11 million and its full year profit to be between $17 million and $20 million. "This guidance primarily reflects a decline in trading conditions in the group's Radio Rentals division and a poor month of trading in September which has continued into this month," the company said.
The firm also pointed to a number of other factors "which may have a material financial impact on Thorn's business in the short to medium term," including the ongoing ASIC investigation into Radio Rentals division and an ongoing class action.
MOVERS
Retail rout
Amazon looks likely to launch in Australia by mid-November and Citi analysts have sized up the likely impact on the local retailers. This year has been a devastating one for the shares of the listed players, which have de-rated by around 30 per cent as investors sweat over the arrival of the global behemoth, Citi notes. Some of this is overdone. "In our view, Super Retail has sold off too aggressively relative to the long term earnings risks," the analysts write, and they retain their "buy" rating on the stock.
China inflation
China's producer price inflation unexpectedly accelerated to a six-month high in September as a construction boom shows no signs of abating and a government crackdown on air pollution triggers fears of winter shortages and frenzied jumps in commodity prices. The producer price index (PPI) rose 6.9 per cent in September from a year earlier, from 6.3 per cent in August, the National Bureau of Statistics said on Monday. The gain - the strongest since March - signals continued resilience in China's economy and industrial sector profits.
Kiwi grounded
The New Zealand dollar held onto its gains against the greenback on Monday to fetch US71.7?? in late trade, but political uncertainty will likely keep it capped with investors awaiting an announcement on the country's next government. The New Zealand dollar benefited after weaker-than-expected US inflation hurt the US dollar at the end of last week but may not push much higher until a new government is formed. "Our view is that further gains from here, until we get political clarity, look a stretch," ANZ senior economist Phil Borkin said.
Hard hats
Just as the housing boom has come to an end, Australia looks set to roll seamlessly into another mini boom - infrastructure investment, Macquarie analysts said. They calculate $237 billion will be spent on infrastructure projects over the coming four years; $16 billion from the federal government and $221 billion from the states. The boom won't reach the "dizzying heights" of the mining investment boom, but it will provide a handy boost to the economy just as the housing boom fades. The NSW and Victorian governments are "the arteries of the cycle", the analysts wrote.
