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Markets Live: Miners haul ASX higher
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Australian shares surged on Friday to cement a third straight session of gains and a weekly advance, with a 37 per cent rise in A2 shares the standout move over the week.
The S&P/ASX 200 index rose 48 points, or 0.8 per cent, to 5999 while the All Ordinaries advanced 47 points, or 0.8 per cent, to 6105. The Australian dollar traded at US78.21¢.
Miners were the strongest performers by sector on Friday, with BHP ending the session up 1.6 per cent at $30.68, South32 rising 6.7 per cent to $3.35 and Newcrest Mining up 2.1 per cent at $22.12.
Banks were also stronger, with CBA up 1.1 per cent at $75.46 and Westpac higher by 0.9 per cent at $30.49.
Over the week, the ASX climbed 1.6 per cent, moving higher in four out of five sessions. It was the third week in four that the ASX had notched a weekly gain of 1.1 per cent or more.
"Australian shares saw good gains with solid profit results helping support the Australian share market," AMP Capital's head of investment Shane Oliver said.
"The December half profit reporting season is around 90 per cent done and has been pretty good," he noted, with 46 per cent of results have exceeded expectations, a better result than average - where 44 per cent of results normally exceed expectations.
Investors were particularly keen on results from A2 Milk and Altium this week, pushing those firms to a 30 per cent-plus weekly gain, with A2 higher by 37 per cent to $11.77 and Altium rising 35.1 per cent to $20.07.
Seven West Media shares were almost as strong, with the media firm jumping 30.6 per cent to 64¢ over the five-day period while rival commercial broadcaster Nine Entertainment climbed 27.8 per cent to $2.07. Both firms released earnings during the period.
Travel firms also did well on a weekly basis, with Webjet lifting 23 per cent to $11.78, Corporate Travel Management gaining 20.2 per cent to $25.27 and Flight Centre rising 15.9 per cent to $56.31 after releasing earnings.
Some companies couldn't join in the weekly advance, with WiseTech Global dropping 16.6 per cent to $11.54 after updating investors on its performance.
Platinum shares fell 11.8 per cent to $6.90 on Friday when investors took their first chance to react to the news that CEO and founder Kerr Neilson will hand over the reins of the asset manager to Andrew Clifford in July.
Best and worst performers.
One of Australia's biggest money managers is betting the Australian dollar will slide, just as hedge funds ratchet up bets on the currency appreciating.
The Aussie will drop to 73 US cents before the end of the year, according to Ilan Dekell, head of macro for global fixed income at AMP Capital Investors. That's at odds with leveraged accounts - often hedge funds - that this year have increased bets that pay off if the Aussie strengthens.
Dekell says you need to expect a fall in the local currency for these reasons:
- Rate differentials - as the Reserve Bank holds interest rates at a record low level through the remainder of this year, the US Federal Reserve will hike rates at least three more times.
- Australia's terms of trade is declining.
- Market volatility is at elevated levels, piling more pressure on the Aussie, which typically performs poorly during risk-off periods.
Hedge funds and other large speculators have turned increasingly bullish on the Aussie this year, shifting from a net short position at the start to a net long of 29,553 contracts in the week ended February 13, according to data from the Commodity Futures Trading Commission.
One of Australia's biggest money managers is betting the Australian dollar will slide.
Struggling surfwear icon Billabong has warned it cannot carry on business as usual if a takeover by the owner of rival Quicksilver does not proceed, as the company reported worsening revenue and net loss for the first half of the year.
Billabong posted a net loss of $18.4 million for the six months to December 31, worse than $13 million a year earlier, while revenue declined seven per cent to $476.4 million.
The company reiterated it expects full-year earnings of between of $51.1 million and $54 million, just above its result for 2016/17.
Billabong CEO Neil Fiske said the result reflected "ongoing difficult trading conditions in retail and much of the action sports sector".
Mr Fiske said despite efforts to address costs and streamline the business, the company was facing "systemic, structural" industry issues.
Shares edged up 0.5 per cent.
Australian surfer Ethan Ewing.
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Japan's core consumer inflation was steady in January from a year earlier in a sign a strengthening economy has yet to prompt companies to raise prices, a challenge policy makers have yet to overcome despite years of massive stimulus.
Subdued inflation has forced the Bank of Japan to maintain ultra-loose policy even as the economic recovery gathers momentum, suggesting it will lag behind its global peers in dialing back its crisis-era stimulus.
A recent Reuters poll showed more than half of Japanese firms do not plan to raise base pay in annual wages talks this year, and the recent market sell-off could give them further excuse to delay pay hikes.
That adds to growing challenges for BOJ Governor Haruhiko Kuroda as he prepares for his second term in April with the central bank - bound by an elusive target - unable to withdraw stimulus even as the cost of prolonged easing rise.
"With wage growth still muted, a marked pick-up in service inflation is not on the cards," said Marcel Thieliant, senior Japan economist at Capital Economics. "The upshot is that the BOJ's 2 percent inflation target remains out of reach."
The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 0.9 percent in January from a year earlier, data showed on Friday.
That was roughly in line with private forecasts and matched the pace of gains in the previous two months, due mostly to increases in gasoline and fuel costs.
An index excluding the effect of fresh food and energy - closely watched by the BOJ as a measurement of demand-driven price growth - saw inflation accelerate to 0.4 percent in January from 0.3 percent in the previous month.
Japan's core consumer inflation was steady in January.
John McGrath's former lieutenant, Geoff Lucas, has returned to take the helm of embattled real estate company McGrath.
Mr Lucas was chief operating officer for eight years from 2008, helping drive the company's growth along the eastern seaboard and its transition from a private to public company.
"I am delighted to welcome Geoff back to the company, as he was instrumental in building McGrath over eight years to 2016," founder and executive director John McGrath said in a statement on Friday.
"Geoff has an intimate knowledge of property and the McGrath business, as well as a strong rapport with our agents, franchise partners and many industry participants."
Mr Lucas takes the reins at a tumultuous time for the firm, whose CEO and board, other than Mr McGrath, left the company this month after reporting a half-year loss of $25.5 million.
Mr McGrath last week appointed Kerry Stokes's former chief financial officer, Peter Lewis, as the new non-executive chairman.
Geoff Lucas has been appointed CEO of McGrath
Photo: Ryan StuartCrown Resorts is pressing ahead with its two major development projects, saying apartment sales in its high-end Sydney tower are "going well", while the listed company seeks financing for its proposed 90-storey skyscraper in Melbourne.
The Australian casino giant recently sold two floors of its under-construction, six-star hotel and residential complex in Sydney's Barangaroo to its largest shareholder, billionaire James Packer, for $60 million.
The $2.2 billion Barangaroo project is due for completion in 2021.
"If you have a view of Barangaroo, you'll see that it's coming out of the ground, so there's some quite high level activity going on at the site," Crown Resorts chief financial officer Ken Barton said this week.
"We have now commenced the sale process for residences ... somewhere between 80 to 90 residences in total are to be sold."
Crown's executive chairman, John Alexander, said the sales of apartments in the Barangaroo complex were "going well", with interest from Australian and international buyers.
An artist impression of the proposed Crown Sydney hotel resort at Barangaroo.
Photo: SuppliedTassal's first-half profit has risen 2.45 per cent to a record $28.4 million after local demand for salmon exceeded the fish farmer's expectations.
Revenue for the six months to December 31 climbed 23.7 per cent to $271.3 million, and Tassal says its strategy of growing bigger fish is paying off.
Tassal has lifted its interim dividend half a cent to a fully franked 8.0 cents and says it expects a record full-year profit.
Shares climbed 7 per cent to $3.89.
Salmon producer Tassal posted a 2.45 per cent rise in profit.
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RBC Capital's chief US economist Tom Porcelli noted that the idea that global central bank quantitative easing remains the backbone of the global equity market rally remains firmly entrenched.
Mr Porcelli said that this is surprising for a couple of reasons:
Firstly, the predicted "removing of the punchbowl" on a global basis could prove to be exaggerated/wrong. Secondly, equity markets and global central bank assets have a questionable relationship historically.
"Think of it this way, over the last 20 years, global central bank balance sheets have never materially declined," he said.
Currency growth and LCR requirements are likely to necessitate a very large perpetual balance sheet and, the US aside, it is not clear that central banks will have the ability to materially wind down their assets given structurally weak long-run economic growth, he added.
"The premise that the punchbowl goes away actually seems like a low probability event," he said.
But does this matter for equity markets?
"Central bank assets and equities are only historically correlated during phases of economic expansions. This suggests that the correlation between rising equity markets and rising central bank assets (the latter has never trended down in the last 18 years) might be spurious," he said.
Jerome Powell, the new chairman of the US Federal Reserve.
Photo: CAROLYN KASTERJust over a week ago, ASX Limited, the owner of Australia's main stock exchange, boasted of its growing clout as a global venue for tech stock listings, writes SMH columnist John McDuling.
Tech, up until recently, was all but absent from the market. Now it is the third biggest source of companies on the exchange, an earnings slide deck showed.
Over the past four years, the total market value of tech companies on the bourse had nearly trebled to $63 billion - 3.3 per cent of the entire market, it said.
One week on, tech on the ASX has certainly been in the headlines but for less flattering reasons.
Consider the following:
-Get Swift, a last mile logistics software company co-founded by a former AFL star, has been hit with a $300 million class action lawsuit amid claims it misled investors through a series of over-hyped announcements. Shares in the company have plummeted 83 per cent;
-Big Un, an online video production company, and the best performing stock on the ASX last year, has requested a voluntary suspension of its shares after being unable to respond to queries from the exchange about its business; and
-Shares in Buddy Platform, an internet of things data cloud (how many buzzwords do you need in a description?) company with tenuous links to Lady Gaga, tumbled when the company emerged from a three week voluntary suspension of trading, after also being unable to respond to ASX queries.
Oh, and just good for measure, there were also reports that social media was being used to pump up the value of small cap stocks on the ASX - and that the corporate regulator was investigating whether the exchange was being used by criminals to launder money.
Tech on the ASX has certainly been in the headlines.
Photo: Jessica Hromas