Local shares started the last session of the week firmly on the front foot in early trade on Friday. The gains came on the heels of a constructive session on Wall Street overnight. US sharemarkets rose with the Nasdaq closing at a record high, while better-than-expected earnings results supported positive sentiment more broadly. Thomson Reuters data reports that of the 82 companies in the S&P 500 that have reported earnings 75% have beat expectations, above the 71% average of the last 4 quarters.
Additionally investors were heartened by comments made by US Treasury Secretary Steven Mnuchin which saying that the administration was close to "major tax reform." Additionally there were indications in the political sphere that a healthcare compromise was being worked on and a vote could take place next Wednesday. Mr Mnuchin highlighted that tax reform is close at hand and will happen whether healthcare is done or not. The Dow Jones index rose by 174 points or 0.9%. The S&P 500 index rose by 0.8% while the Nasdaq gained almost 54 points or 0.9%.
Utilities, Materials and banks led the ASX 200 higher, while Consumer Staples, Telecoms and Industrials were the only declining sub-indices. Participation was below average with around 1.3 billion transactions being measured by the ASX valued at $2.1 billion. At lunch 569 shares were higher, 335 were lower and 336 were unchanged.
The energy sector edged ahead. Saudi Arabia has signalled that a number of major oil producing nations have reached an initial agreement to extend cuts to oil production beyond mid-year. However, the length of the extension, the number of participating countries and the production to be sidelined remain key unknowns. Saudi Arabia noted that their goal is to reduce oil inventories below the 5-year historic average.
Coca-Cola Amatil (CCL) shares fell 10% or $1.04 to $9.71 after the beverage bottler issued a profit warning. First-half underlying net profit in 2017 is expected to fall in response weak demand in the Australian market, which comprises the largest portion of the group’s earnings. CCL sited increased competition as one of the factors responsible for volume and price pressures. Full-year underlying net profit is expected to be in line with last year’s result, although more broadly CCL remains focussed on its medium-term target of mid-single-digit earnings per share growth. CCL said intends to proceed with a previously announced $350 million on-market share buyback on April 26, subject to market conditions.
Shares in DUET Group (DUE) surged after the Foreign Investment Review Board (FIRB) approved the $7 billion takeover bid made by the Hong Kongbased group Cheung Kong Infrastructure (CKI). It was uncertain as to whether the transaction would be granted by the Federal Government given the recent history of FIRB decisions. An earlier proposal by the Chinese owned State Grid Corporation and CKI to take control of electricity network operator Ausgrid was blocked on national security grounds. Additionally, Chinese interests failed in their attempt last year purchase pastoral group S. Kidman & Co. which is Australia’s largest holder of agricultural land, spanning 100,000 square kilometres with a herd of 155,000 cattle. DUE was recently at $3.01 for a gain of 26 cents or 9.6%. The AUD/USD saw a modest recovery in early Asian trade above US75.00 cents, helped by a recovery in the iron ore price in the last day. However, the near term moves in AUD will be dictated by the news before and immediately after the first round of the French Presidential election. If the election result is unclear or Macron and Fillon appear to be knocked out, AUD could fall sharply against the USD and JPY in early Monday morning trade