Local shares closed slightly higher, propped up by massive gains in blood products heavyweight CSL and Bega Cheese, but the market lost a lot of initial impetus as investors turned cautious ahead of Donald Trump's inauguration.
Hawkish comments from the US Federal Reserve was another major driver of market sentiment, boosting the US dollar which prompted gold, copper and oil to move off recent highs.
![Traders Christopher Fuchs, left, and Sal Suarino work on the floor of the New York Stock Exchange, Tuesday, Jan. 17, ...](/web/20170119084843im_/http://www.smh.com.au/content/dam/images/g/t/u/6/f/e/image.related.articleLeadwide.620x349.gtuik7.png/1484809773889.jpg)
The benchmark S&P;/ASX 200 Index and the broader All Ordinaries Index each finished up 0.2 per cent to 5692.2 points and 5745.4 points respectively.
Biotechnology firm CSL, which is one of the top ten companies in the ASX by market capitalisation, enjoyed a 12.5 per cent leap to $111.50 thanks to a significant profit upgrade following much stronger than anticipated sales. That drove the healthcare index 6.5 per cent higher for the session.
![The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each finished up 0.2 per cent.](/web/20170119084843im_/http://www.smh.com.au/content/dam/images/g/t/u/t/3/4/image.related.articleLeadNarrow.300x0.gtuik7.png/1484809773889.png)
In other corporate news, Bega Cheese bought Vegemite and other Kraft brands in a $460 million surprise deal. Investors were overjoyed and sent the share price rocketing up 15.2 per cent.
BHP Billiton and Rio Tinto finished the day up 0.6 per cent apiece. South32 slid 1.1 per cent after the company posted lower first-half production in several of its commodities but says it remains on track to achieve full-year guidance for the majority of its operations.
But aside from sporadic company news, investors failed to get excited about much else. There was a broad selloff in the big banks, except for Commonwealth Bank of Australia, and the strong US dollar weighed on gold stocks.
"There's definitely a feeling that valuations have become overstretched given the lack of fundamental shifts we've witnessed over the last couple of months," said Gary Huxtable, client adviser at Atlantic Pacific Securities.
"Narratives can only carry valuations so far. And with the impending inauguration of Donald Trump a potential catalyst to greatly alter the reflation trade narrative, investors are continuing to lock in recent profits," he said.
A slide in the oil price weighed on energy shares, the worst performing sector in the market behind telecommunications. Woodside Petroleum slid 1 per cent, after it flagged that output was likely to dip in 2017 following near-record production in the past year, while Caltex was off 0.4 per cent.
Shares in troubled infant milk formula group Bellamy's Australia tumbled 2.5 per cent to $3.93, finishing below the $4 mark for the first time since mid-2015, as directors racheted up their criticism of dissident shareholders led by Kathmandu founder Jan Cameron who are seeking board control, as the company pursues plans aimed at reviving its fortunes.
Stock Watch: Carsales
Carsales chief executive Greg Roebuck is retiring from the online car classifieds company he co-founded two decades ago after transforming it from a loss-making start-up into an ASX 100 company. The company's chief operating officer Cameron McIntyre, a nine-year Carsales veteran, will take over as chief executive on March 17. Chairman Jeffrey Browne said Roebuck transformed the company into a business with a market capitalisation of $2.7 billion. He said Roebuck, who co-founded carsales.com in 1997, is leaving the company in a strong position. Shares closed down 2.9 per cent to $10.90, falling as much as 4.5 per cent in early trade. The shares have risen 250 per cent since listing at $3.50 in 2009.
US dollar
The greenback strengthened throughout Thursday after US Federal Reserve Chair Janet Yellen said it "makes sense"for the US central bank to gradually lift interest rates. The Australian dollar was fetching US75.17¢ in late afternoon trading, down about half a cent from the previous session. Dr Yellen pointed to the fact that the US economy is close to full employment and inflation headed towards the US Fed's 2 per cent goal, Yellen's comments highlighted strong US fundamentals which support a strong US dollar, high yields and stocks. The US dollar nearly hit a six-week low on Tuesday after Trump said dollar strength was hurting trade relations with China.
Employment
The economy added 13,500 new jobs in December, but the unemployment rate still ticked up to 5.8 per cent, mainly due to a rise in the participation rate. The amount of new jobs came in a little ahead of economist predictions who had also tipped the jobless rate would remain at 5.7 per cent, but was well below November's 39,100 new positions, which many consider a one-off. Of the new jobs, 9300 were full-time and 4200 part-time, while the participation rate edged up to 64.7 per cent, from 64.6 per cent in the previous month. The Aussie dollar, which was under pressure in early trade, found some support following the numbers.
Iron ore
Chinese steel and iron ore futures are down for a second session as demand for the commodities turned tepid ahead of the Lunar New Year holiday late next week. Australia's largest export was buying $US82.05 a tonne after dropping from the three-year high reached on Wednesday. Traders say that could pull down bids for physical cargoes in the spot market as restocking appetite wanes. The most-active iron ore on the Dalian Commodity Exchange was down 1.6 per cent at 632 yuan ($US92) a tonne, after peaking at 666 yuan in the prior session.
Woodside Petroleum
Shares in Woodside Petroleum slid 1 per cent after the company flagged production will fall by as much as 11 per cent in 2017, in line with analysts' forecasts, even with the start-up of the Wheatstone gas field in Western Australia. Australia's largest independent oil and gas producer is counting on the $US34 billion Wheatstone liquefied natural gas (LNG) project, in which it bought a 13 per cent stake two years ago, to help offset declines at its older assets when it starts producing.