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Local shares started the eve of the Australia Day public holiday under pressure, reflecting mixed outcomes for US shares overnight. The main feature of US trade was a mid-session sell off reflecting the (continuing) rise US 10 year bond yields (long term interest rates) which hampered interest rate sensitive sectors of the market, such as real estate. The ASX 200 opened with flat, before trading 25 point lower at the low of the morning. Ahead of lunch, the index had recovered to be 7 points lower.
Materials and Energy were the only ASX sectors to trade higher at lunch after commodity prices surged overnight as the US dollar fell to the lowest level in 3 years. Industrials, Utilities and Telecoms were the leading decliners. ASX trade in the period to lunch was lower than average reflecting reduced participation ahead of the national holiday on Friday. Around 2.04 billion transactions were measured, valued at $3.4 billion. At the close 536 shares were higher, 548 were lower and 371 were unchanged.
Energy names were higher after oil prices also lifted to multi-year highs overnight after US crude oil inventories fell for a record 10th consecutive week. The fall in US crude oil inventories has added to optimism that oil markets are tightening, with US stockpiles below the 5-year average for this time of year. OilSearch (OSH) shares were at $7.95 for a gain of 5 cents or 0.6%, Beach Energy (BPT) edged higher by 2 cents or 1.5% to $1.35
Gold miners were just one subset of the mining space to benefit from the weakening US Dollar. The latest contribution to the retreat in the Greenback came in the form of comments made by US Treasury Secretary Steven Mnuchin, who endorsed a weaker greenback. Mr Mnuchin told reporters at the World Economic Forum in Davos that “obviously a weaker dollar is good for us as it relates to trade and opportunities”. Bloomberg Dollar Spot Index fell 1%, to its lowest in more than three years, with the measure down 10% in the past 12 months. Gold names firmed in local trade after the metal rose 1.5% overnight. Shares in Northern Star (NST) rose 2.3% or 14 cents to $6.28 after reporting December quarter production numbers. NST sold a total of 128,819 ounces of gold in the December Quarter at an all-in sustaining costs (AISC) of $1,067 per ounce. Gold sold in the six months to 31 December 2017 totalled 267,278 oz at an AISC for the six months of $1,043 per oz. NST said the results place the group on track to meet FY2018 guidance of between 525,000 and 575,000 oz at an AISC of $1,000-$1,050 per ounce.
Shares in online retailer Kogan.com (KGN) rose more than 3% or 22 cents to $6.87 after announcing an agreement with Greenstone Financial Services enabling it to offer insurance products under a “Kogan Life Insurance” brand. The terms of the agreement will see KGN earn commissions on the policies sold ,with an initial focus on life and funeral insurance policies, before expanding over time to include related categories.
Major currencies rose against the US dollar in European and US trade overnight. The Aussie dollar rose from near US80.10 cents to around US80.80 cents and was near US80.75 cents in late US trade. The local unit remained within sight of the best overnight levels in early regional trade on Thursday.
Originally published by CommSec