ASX 200 up 79 to 5054 with materials, energy and banks leading the charge. Volume was better but not spectacular with Asian markets boosted by Chinese data and a weaker yen helping. Japan up 2.83% and China up 2.4%. AUD strong at 76.93 and US futures up 44 points as we write.
A positive day for the market as once again resources pushed ahead. Commodity prices have rallied and together with a follow through for iron ore in our time zone, up around 6%, kept the buyers chasing. News from China on better than expected export numbers also helped kicked the market higher. Even the banks joined in the party as a healthier resource sector does take some of the pressure off corporate bad debts risk.
Momentum is gathering and after a 125-point rise in the last two days we may test 5100 again in the next day or so. The key has been the falling USD and its positive impact on commodity prices. We have the Doha meeting this weekend and oil prices have been squeezed higher in anticipation of an agreement to freeze prices or an even better outcome (production cuts being speculated). There may be some disappointment to come on this front but where oil goes so do equities at the moment.
Positive close on its high suggesting more momentum to come tomorrow.
ASX 200 Index & Aussie dollar charts – Today
Stocks and Sectors
- Resources were the shining light. Fortescue Metals (FMG) +7.77% following good production numbers whilst BHP +6.04% and RIO +4.52% both boosted by a rising iron ore price. In base metals South32 (S32) +4.39% regained ground as did Syrah Resources (SYR) +5.28% and Independence Group (IGO) +4.42%.
- Energy stocks also in the sweet spot on WTI rising above $41 with Woodside (WPL) +2.99% and Santos (STO) +4.33%. Beach Energy (BPT) +8.4% one of the strongest mid-caps with service provider to the oil industry Worley Parsons (WOR) +10.46% also showing some significant gains.
- Gold was somewhat disappointing after the AUD bullion price slipped back to $1627. The sector has had a great run and traders were happy to switch into the more bombed out miners. Northern Star (NST) -5.69%, Evolution Mining (EVN) -2.61% and big daddy Newcrest (NCM) -0.23%.
- Financials finally made some sense with the big four rallying strongly. Westpac (WBC) +2.78% the stand out with the rest up around 2%. Wealth managers didn’t want to miss out and Macquarie Group (MQG) +2.62% rallied strongly with BT Investment (BTT) +1.15% Magellan Financial (MFG) +1.25% and Platinum Asset Management (PTM) +0.17% trailing behind.
- Industrials were better but the action was in the resources today. Builders did well, Boral (BLD) +1.26%, Fletcher Building (FBU) +2.58% amongst the winners with packaging companies Orora (ORA) +2.02% and Amcor (AMC) +2.26% sealing the deal. Telstra (TLS) shares were unchanged.
- Chinese consumer stocks rallied after recent falls and reassuring media commentary. A2Milk (A2M) +1.57%, Bellamy’s (BAL) +5.52%, Blackmores (BKL) +0.47%, Vitaco (VIT) +5.33% and Murray Goulburn (MGC) +1.0%. The gains were still a fraction of the recent loses.
- Good day for Wisetech (WTC) +5.47% following its very successful debut this week at 335c now up 20%.
- Speculative stock of the day: Aspire Mining (AKM) +33.33% following a report from the company in their Nuurstei coking coal project initial resource.
- Fortescue Metals (FMG) +7.77% after another good result this morning. The miner said it could beat its full-year shipments guidance of 165m tonnes, depending on weather conditions. Fortescue said it has shaved cash costs by 6% to $US14.79/ton, compared to $US15.80 in the December quarter. Debt fell to US$5.9bn. The company has said it wants to cut cash costs to $US13 a wet metric tonne by June. That was based on Australian dollar of US71c.
- Company after company in the food and vitamin sector have been on the front foot today with comments on the recent changes to regulatory environment for selling infant formula and other products in China. Vitaco (VIT) +5.33% stated that only one product they currently sell is affected. That is Goat Milk Powder. Both Bellamy’s (BAL) +5.52% and Blackmores (BKL) +0.47% have also stated that they do not see any real issues with the new regime. Good timing with the trade delegation in China at the moment.
- Woodside Petroleum (WPL) +2.99% after signing a heads of agreement with PT Pertamina for the supply of 0.5-1m tonnes of LNG pa.
- In REIT land the battle for Investa Office fund (IOF) -0.97% has just taken an unexpected turn with Cromwell Property (CMW) -0.98% securing a near 10% interest in IOF leaving Dexus (DXS) +0.75% high and dry. This takeover by Dexus has been 18 months in the making and may just unravel at the post.
- There appears to be a divergence between business confidence and consumer confidence at the moment. Today’s number from Westpac/Melb Institute on consumer confidence was a little under whelming compared with a strong NAB Business survey yesterday.
- The Westpac Melbourne Institute Index of Consumer Sentiment fell by 4.0% in April from 99.1 in March to 95.1 in April. The Index is now 6.4% below its reading six months ago in November.
- Bill Evans from WBC had this to say on the numbers. “Four of the five components of the Index fell in April. The sub-index tracking assessments of ‘family finances compared to a year ago’ declined 3.8%, while the component tracking expectations for ‘family finances over the next 12 months’ fell by 6.6%. There was also concern about the economic outlook, the component tracking views on ‘economic conditions over the next 12 months’ down 5.5% and the component tracking expectations for ‘economic conditions over the next 5 years’ down 5.9%”
- Sydney inner city apartment prices are starting to mirror pricing patterns in the troubled Melbourne CBD apartment market falling as much as 19% in the last quarter of 2015 in some areas, a report by global real estate group, JLL, has shown.
- China’s first-quarter GDP growth rate, which is scheduled to be released Friday, is forecast at 6.7%.
- Exports rose by 18.7% on an annual basis in March, compared to a decline of 20.6% the previous month. Imports were also far stronger than expected, falling at an annual pace of 1.7% in March, compared to a decline of 8 % previously.
- Iron ore imports rose by 6.5% over the first quarter, helped by a pick-up in steel prices, manufacturing activity and construction. This was reflected in a 5.6% rise in electricity consumption in March, compared to a fall of 0.3% for 2015.
- Expect optimism to wash over UK markets on the better than expected Chinese export numbers.
- US reporting season back in focus. JP Morgan Chase and Pacwest Bancorp tonight.
- Greece has sold a controlling interest in the port at Piraeus to Chinese company COSCO in a EUR 368.5 deal to take over a 51% interest now and a further 16% in five years and the remainder over the next decade. Greek dock workers are not happy.
- Latest US POTUS betting has Clinton $1.40 Trump $6.00 Others $51. Great choice. Reckon others is the way to go.
Early European Market Futures
- FTSE 6282 up 39
- DAX 9846 up 85
- CAC 4382 up 36
- IBEX 8600 up 54
- MIB 17603 up 158