The Aussie market edged high Tuesday morning ahead of the Reserve Bank’s decision on interest rates this afternoon. The rally came despite significant falls in international markets including China.                   

In economic news, the Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index said manufacturing activity climbed 7.2 points to 51.7 points in August. It was the fourth consecutive month of improvement and the first time in 15 months manufacturing activity grew above 50. 

Meanwhile, according to the ABS the current account deficit soared to $13.35 billion in the June quarter from $6.35 billion in the prior quarter. The worse than expected result was attributed to a sharp drop in exports, with lower iron ore prices shaving billions off that measure.

At lunch, the All Ords was up 27.8 to 4,511.9, while the ASX/200 added 35.4 to 4,514.5. Over 1.2 billion shares, or $1.8 billion had changed hands.

The big four banks backed up yesterday’s outperformance with more solid gains. ANZ and NAB rallied 1.8% and 1.9%, while CBA and Westpac put on 0.8% and 1.3%.

The Banks and Financials sector was 1% higher.

AMP was a standout among the insurers with a 3.9% climb. AXA Asia-Pacific and Suncorp advanced 2.6% and 2%.

Macquarie Group added 1.4%, while Soul Pattinson dropped 2.4%.

Property Trusts fell 1.4% following a strong rally from the sector over recent weeks. Heavyweight Westfield lost 1.6%, while Goodman Group and Mirvac slid 2.4% each.

Dexus shed 2.7%.

Gains from the heavyweights outweighed losses elsewhere in the Materials and Resources sector, which was up 0.7%.

Rio Tinto and BHP Billiton rose 1.8% and 0.7%, while Orica added 2.3%.

Fortescue slid 1.1%. Iron Road soared 25% after revealing an exploration potential of 2.8 billion tonees to 5.7 billion tonnes of magnetite gneiss at its Warramboo Iron project.

Goldminers Lihir and Newcrest tracked the gold price lower with falls of 1.4% and 0.3%.

OneSteel weakened 0.6%, while Bluescope and Sims Metal added 2.8% and 1.5%.

Macarthur Coal slumped 4.2%, while Iluka rallied 5.8%.

Major Energy stocks Woodside, Oil Search and Santos were barely moved. The sector edged 0.2% above the line.

Origin and WorleyParsons put on 1.5% and 2.3%, while Arrow Energy slid 2.6%.

Industrials were mainly lower, however gains among larger capped stocks saw the sector up 0.3%. Leighton and Asciano shed 0.7% and 0.6%.

Qantas slid 1.6% after it reported a 4.5% increase in passenger numbers across its group of airlines for the month of July, versus the previous July.

Brambles was a standout with a 3.9% climb, while Transpacific Industries spiked 5.9%.

Toll and Transurban rose 1.9% and 2.2%.

Consumer Staples rallied 1.2% on the back of 2.2% and 1.7% gains from Woolworths and Wesfarmers.

Beverage maker Coca-Cola Amatil added 1.3%, Lion Nathan was flat and Fosters dropped 4%.

Goodman Fielder surged 3.9%.

Heavyweight retailers and gamers saw the Consumer Discretionary sector 0.5% higher. Billabong, JB Hi-Fi and Harvey Norman gained 2.8%, 2% and 1.3% respectively.

Aristocrat jumped 4.5%, while Crown put on 0.6%.

REA Group and APN News & Media witnessed the biggest falls in a sea of red for media stocks. They were 4% and 4.2% lower.

A 1.5% rise from Telstra saw the Telecommunications sector 1% above the line. 

4.1% and 2.3% climbs from Cochlear and Ansell were countered by falls elsewhere within the Healthcare sector, which was only up 0.3% at noon.  

Around the region, the Nikkei 225 added 48.3 to 10,540.9, the Straits Times Index put on 22.3 to 2,615.2 and NZSE50 slid 33.1 to 3,064.9.

Spot gold was trading at US$952.10 per ounce and the Aussie was buying US$0.8439.

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Qantas passengers up 4.5% in July
Qantas Airways reported a 4.5% increase in passenger numbers across its group of airlines for the month of July, from the previous July. The airline also noted that foreign ownership of Australia’s national carrier stands at 46.9%.

At lunch, Qantas shares fell 4c to $2.49.

United Group expects $162m pa for MTM
United Group said its expected share in the Metro Trains Melbourne (“MTM”) is $162 million each year over an eight-year period. The announcement followed MTM reaching financial close with Victoria’s Department of Transport on the contract to operate and maintain Melbourne’s passenger train franchise.

Half way through the day, United Group shares were down 22c to $14.50.

Iron Road exploration target identified
Iron Road shares surged Tuesday morning after the iron ore miner announced Coffey Mining had completed an exploration target at the Warramboo Iron project. The findings included an exploration potential of 2.8 billion tonees to 5.7 billion tonnes of magnetite gneiss and potential for 95km cumulative strike length of magnetite gneiss over project area.

At lunchtime, Iron Road shares were up 11c to 55c.

Al Habtoor Leighton Group awarded water project
Joint venture Al Habtoor Leighton Group (“HLG”), in which Leighton Holdings subsidiary Leighton International is a partner, has been awarded a QR 750 million water infrastructure project to connect two Qatari communities. HLG said the project, awarded by Qatar General Electricity & Water Corporation, would include the development of new and independent water infrastructure facilities in the Duhail and Umm Qarn communities.

At noon, Leighton shares were trading at $36.69.