Aussie shares are off to a better start on Wednesday despite an uninspiring mixed finish on Wall Street and slightly firmer than expected economic growth data. The ASX 200 index is up 0.38 per cent and is being led higher by gains from materials and held back most by losses from the banks.
While this largely recoups most of Tuesday’s losses, for close to two weeks local stocks have been improving one day and falling the next. The ASX 200 has continued to struggle with the 6000pt level which it remains above today. The enthusiasm that made April the best month since October 2017 has faded from the middle of May.
The Australian economy grew by 1 per cent in the March quarter (quarter on quarter) which marks the strongest expansion in six years. Over the year, GDP is up 3.1 per cent, the best growth in close to two years. Growth in exports (particularly commodities) accounted for ~half GDP growth. Government spending and household consumption were other solid contributors. While the Australian dollar rose following the data, the fact that wages growth remains soft, the market is only pricing in a 20 per cent chance of a rate hike by December.
Materials are standing out and are helping to keep the ASX 200 positive. Following a tumble on Tuesday, BHP Billiton (BHP), Rio Tinto (RIO), South32 (S32), Newcrest (NCM), BlueScope (BSL) and Fortescue (FMG) are the biggest contributors to gains following solid gains from most commodities overnight.
Copper rose by almost 2 per cent on supply concerns. The main union at BHP’s Escondida copper mine in Chile (the world’s largest copper mine) is considering strike action as wage negotiations continue.
While company news remains light, grocery distributor Metcash (MTS) is in focus and is plummeting by 3 per cent. MTS said it will write-down the value of its supermarkets business by $352m this year due to the recent loss of a major customer in South Australia (Drakes). Telstra (TLS) is treading water around sevenyear lows.
1.6bn shares have changed hands so far worth $2.1bn. 572 stocks are up, 484 are down and 396 remain unchanged.
Published by CommSec