Early Morning Call: ASX 200 outperforms APAC indices thanks to mining stocks

Indices overview

European and US equity markets ended Wednesday’s session higher, but overnight only the Australian S&P/ASX 200 recorded gains, with the help of mining stocks.

In an interview with CNBC, Fortescue Metals CEO Andrew Forrest said he thinks that China's economic recovery will lead to a demand in commodities stronger than during the period that followed the 2008 crisis. At the time, China avoided recession with a stimulus programme that supported infrastructure development, which boosted demand for commodities. Since 2008, China's economy has grown to become the world's second largest economy.

Macroeconomic indicators

Calm prevails on the currency market ahead of a few macroeconomic indicators expected later today.

At 1pm, the market awaits the latest CPI data from Germany. Economists expect the index to rise 7.3% in March year-on-year (YoY), decelerating from an 8.7% growth in February. The EU harmonised CPI, a reading favoured by Christine Lagarde's team, is forecast at 7.5% YoY, after 9.3% the previous month.

In the US, expect the final reading of US GDP in the first quarter. Economists anticipate the US economy to have expanded 2.7% during that period.

Equities

Yesterday Alibaba announced a major restructuring plan that would transform the group into a holding company and that its activities would be divided in six sub-divisions, each with their own CEOs and boards. Alibaba shares soared as much at 16% on the news.

Overnight, Alibaba group CEO Daniel Zhang told investors that the breakup will allow its units to become more agile and eventually list on their own. On the same call, Alibaba CFO Toby Xu said the group would "continue to evaluate the strategic importance of these companies" and "decide whether or not to continue to retain control", adding that "each company can pursue financing and IPO as and when they are ready".

When asked about the timeline for the listings, Xu said the changes would come into effect immediately. This plan makes sense to analysts, who believe Alibaba is currently undervalued as a conglomerate.

Even Morgan Stanley (24 Hours) thinks the stock value could double. A breakup would allow investors to value each business division independently. Alibaba shareholders would also be better protected from regulatory pressures. Penalties levied on one division would in theory not affect the operations of another.

Since Chinese authorities started their crackdown on the country's tech sector, Alibaba's market valuation fell from $800 billion to $260bn.

Commodities

US crude oil stockpiles fell unexpectedly last week according to the latest EIA inventories. Crude inventories fell by 7.5 million barrels as refineries restarted operations after maintenance.

Refinery operations hit their highest so far this year, up by 1.7 percentage points to 90.3% of total capacity.

Gasoline stocks fell by 2.9 million barrels, and distillate stockpiles rose by 300,000 barrels.