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Local shares advanced in early trade on Thursday, shrugging off the weaker trend seen in US and European trade overnight. US equity markets sold off as a trade tensions between the US and China intensified after the Trump Administration released a list of $200bn in additional imports from China on which it proposes a 10% tariff. European sharemarkets fell for the same reason.
The ASX 200 opened the session with a five point loss, before recovering to be ahead by 41 points at the best levels of the morning. As lunch approached the index remained ahead by 43 points. Materials, Energy and Telecoms were the only 3 sectors to be in the red at lunch. On the other end of the spectrum, Healthcare names were the most improved, whilst banks recovered some of their recent losses. In the period to lunch 1.2 billion trades were measured by the ASX valued at $2.2 billion. 512 stocks were higher, 403 were lower and 350 were unchanged.
Energy names led the declines in response to crude oil experiencing its steepest decline in 2 years. The move came despite figures from the Energy Information Agency EIA showing a larger than forecast decline in US crude inventories in the last week. Balancing the result was news that Libya’s National Oil Company would re-open its ports, which have been closed since late June. Elsewhere, OPEC forecast that global demand for oil would decline in 2019 by 760,000 barrels per day to 32.18 million. A short time ago OilSearch (OSH) shares were at $ 8.82 to be down 20 cents or 2.3%
Materials were lower as a group after a stronger US dollar created headwinds for commodities in general in the last 24 hours. The Greenback, which saw its biggest rally in a month, helped unseat metals prices in turn putting pressure on miners. Fortescue Metals Group (FMG) shares withstood the pressure to be flat at $4.35, South 32 (S32) shares were at $3.60 down 4 cents or 1.1%
Shares in a2 Milk (A2M) eased 21 cents or 2% to $10.61 after the dairy company released a trading update and outlook. Unaudited revenue for the financial year ended 30 June 2018 (FY2018) was approximately $NZ922million, a near 68% increase compared to the previous corresponding period. The result was at the top of the groups forecast for revenue to be in the range of $NZ900 million to $NZ922 million. The company expects an EBITDA to sales ratio for FY2019 to approximate 30%, a similar outcome to the previous year. Costs are expected to be higher in 2019 reflecting increased marketing expenditure and an expansion of group’s Chinese operations. A2M shares have risen more than 40% in year to date terms.
Village Roadshow (VRL) shares resumed trade after a trading halt in which the entertainment operator raised $35.7 million from institutional investors. A further retail entitlement offer is expected to raise approximately $15.7 million. The funds raised will be used to reduce borrowings. VRL shares were down by 10% or 22 cents at $1.87.
Published by CommSec