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CommSec Daily Report Friday

CommSec Daily Report Friday

Aussie shares are down by 0.2 per cent on Friday, putting an end to a four-day winning streak due to losses ...

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08.02.2019 01:21 PM

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 Aussie shares are down by 0.2 per cent on Friday, putting an end to a four-day winning streak due to losses from resource stocks at lunch. The ASX 200 however remains above 6000pts, near fourmonth highs and keeps the index on track to record its best weekly performance since December.

Global markets provided local equities with a weak lead overnight due to a lack of progress on the US-China trade negotiation front and fears of a global slowdown. According to President Trump, a meeting with Chinese President Xi is unlikely to occur before 1 March (the self-imposed deadline for a trade deal). White House economic advisor Larry Kudlow told Fox news that there is a long way to go in the trade talks.

The banks are adding to Thursday’s gains, helping limit the market’s losses at lunch. An exception is National Bank (NAB) which is down 0.6 per cent following news both the CEO and Chairman are stepping down at the end of this month. NAB’s 1Q earnings slipped by just 3 per cent to $1.65bn in the three months to 31 December 2018.

Across the market, resource stocks are weighing most heavily. Energy companies are struggling due to a 2.5 per cent slump in the oil price last night. Both the European Commission and the Bank of England downgraded growth expectations for the European and UK economies.

The iron ore price surged by 4.4 per cent to US$90.5/t (a near twoyear high). Markets reacted to Brazilian regulators ordering Vale shutdown some of its mining operations due to the tragic collapse of a tailings dam a fortnight ago. While mining stocks are falling today, iron ore miners have surged over the past two weeks. Fortescue (FMG) has improved by 25 per cent, Rio Tinto (RIO) by 12 per cent and BHP Billiton (BHP) by 7.5 per cent.

REA Group (REA) is down 5 per cent despite posting a 20 per cent lift in half year earnings to $176.6m and a 17 per cent increase in its interim dividend. The operator of the realestate.com.au website warned however that the number of properties being listed may be weaker leading up to the NSW and Federal elections in coming months.

The RBA has released its quarterly Statement on MonetaryPolicy. The central bank cut its forecasts for the Aussie economy this year. It expects GDP to grow by 3 per cent (previously 3.25 per cent) while CPI inflation to be up 1.75 per cent over the year to December 2019 (previous 2.25 per cent). This continues to suggest the RBA is in no rush to move on interest rates and seems likely to sit on the sidelines for an extended period. The Australian dollar slumped following the statement’s release.

1.1bn shares have changed hands so far worth $2.8bn. 395 stocks are up, 527 are down and 389 are unchanged.
 
Published by CommSec 

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