Local shares started the final session of the week with modest losses emulating a flat finish for US stocks overnight. Local participants initially opted for caution ahead of the weekend, after watching US markets give up substantial early gains. However after the first hour of trade the index had bottomed out to trend higher. As lunchtime loomed the ASX 200 was 7 points higher having been 23 points higher and 17 points lower at best and worst levels of the morning.
Initial trade saw the majority of sectors measured by the ASX were trading in the red. Interest rate sensitive sectors such as Utilities and Property Trusts led the declines after global long term interest rates continued to move higher in overnight trade. Additionally, Industrial names posted solid declines, whilst Materials and Energy stocks added to yesterday’s improvements. The recovery into lunch was led by the banks, although Property Trusts and Utilities remained shackled by solid losses and industrials were still in the red.
Participation was above average with around 1.6 billion transactions being measured by the ASX valued at $2.2 billion. At lunch 554 shares were higher, 535 were lower and 350 were unchanged.
Energy and Materials names led the market higher at lunch time reflecting gains in underlying prices overnight. Global oil prices firmed after a Reuters survey showed strong compliance on the production cuts agreed to by OPEC and non OPEC nations. Miners firmed on the back of better metals prices in the last 24 hours – base metal prices rose by up to 3% on the London Metal Exchange on Thursday with nickel and lead up the most, although Iron ore fell by US40 cents or 0.5% to US$72.70 a tonne
In company news, Murray Goulburn (MGC) shares were flat at 25 cents after the Australian Competition and Consumer Commission (ACCC) delayed a decision to rule on Saputo’s proposed acquisition of the dairy co-operative. The delay stems from regulator requiring more time to gather information to properly consider the transaction. MGC anticipates the transaction will be completed in the first half of 2018. The ACCC expects to hand down a decision on 1 March 2018, compared to the initially scheduled 15 February date.
Shares in James Hardie (JHX) rose 5% or $1.24 to $23.39 after the maker of building materials raised its forecast for full year operating profit to a range between US$260 million and US$275 million, raising the lower part of the range from at least US$245 million. JHX reported that group net sales rose by 9% and 7% respectively to US$495 million for the quarter and US$1,528.6 million for the nine months compared to the previous corresponding period (pcp). Adjusted net profit rose 33% to US$69.9 million for the quarter and 6% to US$205.5 million for the nine months compared to the pcp. JHX said that outlook assumed housing conditions in the U.S. continued to improve in line with its forecasts.
Gaming machine maker Aristocrat Leisure (ALL) was placed in a trading halt on Friday ahead of a ruling by Federal Court on the matter of whether some of ALL’s gaming machines are compliant with federal laws. The trading halt will remain in place until ALL makes an announcement or the start of trade on Tuesday February 6 – whichever is earlier. ALL shares last traded at $24.45 to be up 3% year to date , having risen by 53% in 2018.
Most major currencies firmed against the US dollar in the last 24 hours. The Aussie dollar fell from near US80.45 cents to US79.85 cents but was back near US80.40 cents at the close of US trade. In early Asian trade the local unit had eased to be at 80.10 US cents.
Originally published by Tom Piotrowski – Market Analyst (Author) CommSec