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A better start to the final big week of 2019 for the market, with the ASX 200 index up 1.2 per cent or 81pts to 6820.8. News Friday night that the US and China have reached a Phase One trade deal seems to be providing a boost while Treasury’s more downbeat assessment of the global economy slightly raised the market’s expectations of a February rate cut.

In regards to the trade deal, China has essentially agreed to buy more from the US and in return the United States has made some concessions on tariffs. China will buy at least US$200bn in additional American goods and an extra US$40- US$50bn in extra agricultural products over the next two years. The US will halve tariffs (from 15 per cent to 7.5 per cent) on around US$120bn of Chinese imports and won’t impose tariffs on a planned US$160bn of goods which were going to kick in yesterday. Markets have been somewhat hesitant offshore however, as this is yet to be officially signed, won’t take effect for an additional 30 days and there is some confusion over the timing of future negotiations.

All sectors are higher at lunch, with gains nearing 1.5 per cent from the banks providing the biggest boost to equities.

Qantas (QAN) is up slightly despite headlines suggesting Jetstar is cutting 10 per cent of its domestic flights in January. This is because of a pay dispute with two unions as a precautionary measure.

Australian Pharmaceutical Industries (API) – the owner of Priceline – solid its ~$84 million stake in Sigma Health (SIG) because it no longer considers a merger with the drug distributor as beneficial or in line with its strategy. SIG shares are slumping by 8 per cent.

Gold miner Northern Star (NST) has entered a trading halt at its request pending an announcement on a ‘potential significant transaction’.

Salary packaging company Smartgroup (SIQ) is down 15 per cent after warning of lower profits and shortly after receiving a broker downgrade. SIQ flagged a $4 million hit to earnings due to term changes by its insurance underwriting partner.

The focus this week will be partly on the latest Australian jobs data, Chinese economic news this afternoon together with both ANZ and National Bank (NAB) holding AGMs.

1.2bn shares have changed hands so far worth $2bn. 610 stocks are up, 368 are down and 321 are unchanged.

Published by CommSec