Aussie shares are trading at four-month highs with the ASX 200 up 1.9 per cent and back above the key 6000pt level. Gains from the financials and miners are making the difference. Local stocks have rallied by more than 10 per cent from the lows hit in December and have recouped almost all 2018’s falls since January.
Investors have their first opportunity to react to the final report of the Royal Commission which was released after market close on Monday. AMP Limited (AMP) is up 9.3 per cent, IOOF (IFL) is up 12 per cent while the big four banks are up between 4.5 – 6 per cent..
Keep in mind AMP, IFL and Mortgage Choice (MOC) more than halved in value in 2018. Investors reacted to the 68 hearings conducted over the past year together with restructures, asset sales, changes in leadership and fines. The underperformers in the financial space today are mortgage brokers. Mortgage Choice (MOC) is down 21 per cent while Australian Finance Group (AFG) is down 29 per cent. A recommendation to remove trailing commissions and make changes to the way brokers are paid has been a weight this morning.
Flexigroup (FXL) is down 20 per cent after the financial services provider cut its profit expectations for the year due to issues with its Commercial Leasing business.
Mining stocks are also improving strongly despite mostly lower commodities prices over the past day. Oil fell 1.3 per cent, iron ore eased by 0.4 per cent and gold lost 0.2 per cent. Keep in mind that iron ore surged by 15.5 per cent last week due to a deadly iron ore mining disaster in Brazil which has killed at least 110. A Brazilian court ordered Vale (one of the world’s largest iron ore miners) to halt some of its production following the accident. There is a chance iron ore prices could lift when Chinese buyers return from week-long Lunar New Year holidays next week.
Retail trade in December fell by a worse than expected 0.4 per cent which highlights that consumer spending was soft heading into Christmas but also that we’re spending money a little differently. A number of online sales (Black Friday, Cyber Monday, Click Frenzy) helped push sales higher in November.
1bn shares have changed hands so far on Tuesday worth an above average $2.9bn. 568 stocks are up, 377 down and 336 are flat.
Published by Steven Daghlian – Market Analyst, CommSec