The Australian share market has ended the day modestly higher, while a surge in the US greenback has helped push the Aussie dollar to its lowest level in more than two months.
The benchmark S&P/ASX200 closed up 6.1 points, or 0.11 per cent, at 5,670.4, with gains in the health, utilities and financial sectors offsetting another slide in iron ore prices that hit the miners.
The Australian dollar reversed some of its recent momentum in the face of a resurgent US dollar that has continued to gain in strength following strong economic indicators.
The local currency hit a low of 78.06 US cents on Thursday afternoon, its lowest level since July 17, after its downward move against the greenback was accelerated mid-morning in the wake of job vacancy data showing a six per cent increase in vacancies since May.
The dollar was trading at 78.19 US cents at 1630 AEST on Thursday, from 78.56 on Wednesday,
CMC Markets' Australian chief market strategist Michael McCarthy said the strong leads from overseas - the S&P 500 Index striking another all-time high - and recent global economic optimism should have lifted the local market above its softer showing.
"The ASX 200 index is still at the lower end of its recent trading range, while neighbouring (Asian) indices are at multi-year highs, so the failure to launch today provides a bit of a technical signal that we could see sharper fall over the coming days," Mr McCarthy said.
A mixed picture for global oil prices left the local energy sector weaker, with Woodside Petroleum down 1.4 per cent at $29.43, Oil Search down 0.7 per cent at $7.06 and Santos down 1.5 per cent at $4.08.
Gas retailer AGL ended the day up 38 cents, or 1.66 per cent, at $23.23 as analysts described fears of federal government intervention and the potential re-regulation of retail electricity prices, discussed at its Wednesday AGM, as "longer-term" factors with "minimal implications" for its 2017/18 earnings.
Origin Energy rose 0.7 per cent to $7.50 after the company said it had agreed to sell its conventional oil and gas exploration business Lattice Energy to the Kerry Stokes-backed Beach Energy for $1.6 billion.
In the banks, the big four were all around 0.5 per cent higher, except for ANZ which shed 0.2 per cent to close at $29.75.
The major iron ore companies were all sharply down, with iron ore futures on the Dalian exchange now down 25 per cent in four weeks.
At the close, Fortescue Minerals was 2.7 per cent lower at $5.06, Rio Tinto was down two per cent at $65.47 and BHP Billiton was one per cent weaker at $25.58.
Shares in formula manufacturer Synlait Milk, a partner of A2 Milk since 2010, were sharply higher, up 49 cents or 9.1 per cent at $5.87 following clearance from the China Food and Drug Administration for A2's continued infant formula exports to China.
Shares in A2 Milk were flat at $5.99.
ON THE ASX:
* At 1630 AEST, the benchmark S&P/ASX200 was up 6.1 points, or 0.11 per cent, at 5670.4 points
* The broader All Ordinaries index was up 6 points, or 0.1 per cent, at 5,731.5 points
* The SPI200 futures contract was up 5 points or 0.09 per cent at 5,646 points
* National turnover was 3.7 billion securities traded worth $6.5 billion
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 78.13 US cents, from 78.56 US cents on Wednesday
* 88.297 Japanese yen, from 88.50 yen
* 66.53 euro cents, from 66.81 euro cents
* 58.39 British pence, from 58.72 pence
* 108.80 NZ cents, from 109.37 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,280.36 per fine ounce, from $US1,291.94 per fine ounce on Wednesday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 2.0632pct, from 2.0319pct on Wednesday
* CGS 4.75pct April 2027, 2.8062pct, from 2.7375pct
Sydney Futures Exchange prices:
* December 2017 10-year bond futures contract at 97.11 (implying a yield of 2.89pct), from 97.185 (2.815pct) on Wednesday
* December 2017 3-year bond futures contract at 97.79 (2.21pct), from 97.83 (2.17pct).
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)
In the U.S., Wall Street edged higher on Thursday, as the S&P 500 eked out a record on gains in McDonald’s and healthcare names, while investors continued to hope President Donald Trump will be able to make progress on tax reform.
Shares in the world’s biggest fast food chain (MCD.N) rose 2.23 percent, their biggest single-day percentage gain in more than two months, after Longbow Research upgraded the stock to “buy.”
Financials .SPSY, up 0.12 percent, and the Russell 2000 index of smallcap stocks , up 0.27 percent, which are expected to be among the beneficiaries of a tax reduction, turned higher after trading lower in the early portion of the session.
But gains were tempered with equities at record highs and valuations elevated. The forward price-to-earnings ratio (P/E) on the S&P stood at 17.9 compared with its long-term average of 15.1 while the forward P/E on the Russell is 26.3 against an average of 21.3.
“It looks like the market doesn’t want to sell strength here, it wants to buy weakness,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
U.S. Treasury Secretary Steven Mnuchin said Trump’s proposal for a cut in the corporate income tax rate to 20 percent was “not negotiable.”
The plan, which called for tax cuts for most Americans, also drew criticism for favoring business and the rich and potentially adding trillions of dollars to the deficit.
A Commerce Department report showed the economy grew a bit faster than previously estimated in the second quarter, but the momentum probably slowed in the third as Hurricanes Harvey and Irma temporarily curbed activity. The storms also pushed up initial claims for state unemployment benefits for the week, the Labor Department said.
“People are waiting to see if the economy actually picks up, they are going to be waiting a long time if they are anticipating it is going to pick up meaningfully,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.
The Dow Jones Industrial Average .DJI rose 40.49 points, or 0.18 percent, to 22,381.2, the S&P 500 .SPX gained 3.02 points, or 0.12 percent, to 2,510.06 and the Nasdaq Composite .IXIC added 0.19 points, to 6,453.45.
The healthcare index .SPXHC led S&P gainers, rising by a third of a percent.
Advancing issues outnumbered declining ones on the NYSE by a 1.47-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.
About 5.85 billion shares changed hands in U.S. exchanges, compared with the 6.26 billion daily average over the last 20 sessions.
Source: Netwealth Morning Business Roundup
Public holiday in Vic today.
Breakky - something to share with the kids on school holidays plus some Cat Coffee.
