The Australian share market has recovered from early weakness to eke out a tiny gain despite fears of a US-China trade war and lower commodity prices weighing upon mining and energy stocks.
The benchmark S&P/ASX200 closed up 10.1 points, or 0.17 per cent, at 6,104.1 points, while the broader All Ordinaries index was up 7.5 points, or 0.12 per cent, to 6,212.8 points, supported by strength among the big four banks.
CMC chief market strategist Michael McCarthy said it was a surprisingly good day for the Australian market given that investors in China and Hong Kong were on holiday and that the Japanese market was weaker.
“”The big issue for markets globally and locally is the potential for a trade war,” Mr McCarthy said.
“The gains that we see on the broad market (in Australia) come despite a lot of pressure on the material and energy sectors – both of those in the red given lower commodity prices.
Mr McCarthy said the “otherwise unloved” sectors of property trusts, healthcare, financials and utilities had led gains, suggesting “there could be be some element of bargain-hunting to the trading today”.
Mr McCarthy said a lower Australian dollar also made Australian shares appear attractive.
Resources and energy stocks were unsettled by lower commodity prices and concerns over tit-for-tat trade tariffs between the US and China as both countries announced tariff hikes on a range of each others’ exports over the weekend.
Global miner BHP Billiton fell 2.4 per cent to $32.76, Rio Tinto lost 2.0 per cent to $84.01, and Fortescue Metals eased 1.3 per cent to $3.85.
BHP and Rio were sold off in London on Friday after Investec downgraded them to a hold from a buy
South32 dropped five cents, or 1.3 per cent, to $3.85 after it offered $US1.3 billion ($A1.75 billion) to buy the 83 per cent of US-focused Arizona Mining it does not already own.
Atlas Iron surged 0.8 cents, or 22.22 per cent, to 4.4 cents after Gina Rinehart’s Hancock Prospecting made a $390 million takeover bid for the junior miner – topping the offer made by mid-tier player Mineral Resources.
Energy companies lost ground after oil prices fell more than $US2 a barrel due to the US-China trade tensions and expectations that OPEC and Russia will agree to increase supply.
Woodside Petroleum backtracked 0.8 per cent to $34.00, and Santos retreated 0.7 per cent to $5.94.
In the banking sector, Commonwealth Bank picked up 1.0 per cent to $69.70, National Australia Bank added 1.4 per cent to $26.52, ANZ found 1.4 per cent at $27.05, and Westpac gained 0.9 per cent to $28.15.
Among other stocks, Bubs fell four cents, or 4.5 per cent, to 85.5 cents after the infant and goat dairy products supplier sold new shares to raise $40 million to support new opportunities and growth, particularly in China.
Lower commodity prices affected the Australian dollar, which at one point fell to a one-year low.
The Aussie was to 74.44 US cents – its lowest level since June 2017 at 1700 AEST, down from 74.57 US cents on Friday.
ON THE ASX:
* The benchmark S&P/ASX200 closed up 10.1 points, or 0.17 per cent, at 6,104.1 points
* The broader All Ordinaries index was up 7.5 points, or 0.12 per cent, at 6,212.8 points
* The SPI200 futures contract was up 18 points, or 0.3 per cent, at 6,118 points
* National turnover was 3.2 billion securities traded worth $5.6 billion
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 74.44 US cents, from 74.57 on Friday
* 82.29 Japanese yen, from 82.60 yen
* 64.30 euro cents, from 64.46 euro cents
* 56.18 British pence, from 56.34 pence
* 107.25 NZ cents, from 107.48 cents
The spot price of gold in Sydney at 1700 AEST was $US1,279.303 per fine ounce, from $US1,298.97 per fine ounce on Friday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent May 2021, 2.102pct, from 2.122pct on Friday
* CGS 4.75pct May 2028, 2.671pct, from 2.6956pct
Sydney Futures Exchange prices:
* September 2018 10-year bond futures contract at 97.315 (implying a yield of 2.685pct), from 97.2925 (implying a yield of 2.7075) on Friday
* September 2018 3-year bond futures contract at 97.865 (2.135pct), from 97.850 (2.150pct).
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)