Hope you all enjoyed the weekend. As we head into the final week of September, I'm hoping for some nice runners (and I don't mean shoes )
Strong gains in the mining sector have lifted the Australian share market to finish the week higher as a major ratings agency upgraded its outlook on the country's credit standing and trade war worries recede.
The benchmark S&P/ASX200 index was up 25.1 points, or 0.41 per cent, to 6,194.6 points on Friday, while the broader All Ordinaries index was 28.5 points, or 0.45 per cent, higher at 6,305.4 points.
The Australian dollar had its best week in more than a year as S&P Global Ratings on Friday revised its outlook to stable, from negative, removing the risk of a downgrade to Australia's triple-A credit rating and supporting bond prices.
"That is a really big deal," CommSec market analyst Tom Piotrowski said.
He said the rating was particularly pleasing considering the recent political uncertainty in Canberra which resulted in a change of prime minister.
"They focused on the expectation that revenues are going to continue to improve and they also said the unwinding of the housing market is going to be orderly."
The Aussie dollar was buying 72.89 US cents at 1630 AEST and holding gains for the week of 1.9 per cent, the largest since July last year.
Copper prices ended two days of gains to cool overnight, and iron ore also edged down, but the big Aussie miners gained nonetheless.
BHP shares were up 2.5 per cent to $33.58, while Rio Tinto lifted 1.8 per cent to $79.49 a day after it announced it would return $3.2 billion to shareholders from its sale of Australian coal assets this year, in addition to existing buyback programs.
Shares in Fortescue Metals were up 4.2 per cent to $3.95, and South 32 Limited jumped 1.3 per cent to $3.90 after it successfully appealed a damages decision on its Cerro Matoso nickel mine in Colombia.
The financial sector was up slightly at the close with Westpac recording the strongest gains of the big four banks, up 0.3 per cent to $28.16, while NAB was the only major lender in the red, down 0.3 per cent to $27.66.
In companies news, jewellery chain Michael Hill has hired Specialty Fashion's Daniel Bracken as chief executive after current CEO Phil Taylor quit citing health problems.
Mr Bracken, a former Myer deputy chief executive who oversaw Specialty Fashion's well-received sale of the Katies, Millers, Crossroads, Autograph and Rivers retail brands, will join Michael Hill in November.
Michael Hill shares closed 0.6 per cent down at 88.5 cents, while Specialty Fashion shares had not moved at $1.25.
ON THE ASX:
* The S&P/ASX200 closed up 25.1 points, or 0.41 per cent, to 6,194.6 points
* The All Ordinaries was 28.5 points, or 0.45 per cent, higher at 6,305.4 points
* In futures trading the SPI200 futures index was up 26 points, or 0.42 per cent, at 6,192.0 points at 1630 AEST.
CURRENCY SNAPSHOT AT 1630 AEST:
One Australian dollar buys:
* 72.89 US cents, from 72.57 US cents on Thursday.
* 82.23 Japanese yen, from 81.40
* 61.88 euro cents, from 62.09
* 54.97 British pence, from 55.17
* 108.97 NZ cents, from 109.13
GOLD:
The spot price of gold in Sydney at 1630 AEST was $US1,208.71 per fine ounce, from $US1,204.60 on Thursday.
Industrials led the Dow to a new closing high on Friday ahead of Monday’s major sector reshuffle, capping a week that largely shrugged off trade worries.
Trading volume spiked to the highest level since Feb. 9 in anticipation of the S&P 500 sector change, when telecoms will be folded into a new sector called communications services, along with heavy-hitting stocks such as Facebook Inc (FB.O) and Walt Disney Co (DIS.N).
While the Dow closed higher, the S&P 500 and the Nasdaq ended the session in negative territory. The S&P and the Dow posted weekly gains, with the Dow showing its biggest weekly percentage advance in over two months. The Nasdaq lost ground on the week.
“Quadruple witching,” when stock options and futures expire, and the rebalancing of the S&P 500 and the Russell 2000 indexes also contributed to heavier traffic.
“A lot of those changes have been anticipated by the index funds, and they’ve prepared for it,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “But there’s a lot going on.”
Yields on long-dated U.S. Treasuries edged down on Brexit anxieties even with Federal Reserve expected to hike key interest rates next week. Financial stocks .SPSY headed lower, ending their recent rally.
“Any time there is a rate hike you potentially see a flattening of the yield curve, which is not good for financials,” said Ghriskey.
The Dow Jones Industrial Average .DJI rose 86.52 points, or 0.32 percent, to 26,743.5, the S&P 500 .SPX lost 1.08 points, or 0.04 percent, to 2,929.67 and the Nasdaq Composite .IXIC dropped 41.28 points, or 0.51 percent, to 7,986.96.
Advancing issues outnumbered declining ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.
The S&P 500 posted 56 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 64 new highs and 46 new lows.
Volume on U.S. exchanges was 10.77 billion shares, nearly 64 percent higher than the 6.57 billion average over the last 20 trading days.
Australian markets are tipped to open lower this week, erasing Friday's gains, after a flat result on Wall Street.
But the focus will be on the United States' Federal Reserve which is expected to drive down the Australian dollar when it announces another interest rate hike.
"It looks like we had a rally on Friday and we'll give up most of that," AMP Capital's chief economist Shane Oliver told AAP on Sunday.
That's because, despite European shares briefly rallying on Friday along with the Dow Jones - up 0.3 per cent - tech stocks dropped half a per cent and dragged down the other markets.
The lacklustre result was in part due to technical reasons, Dr Oliver said, which triggered a sell-off as US markets closed.
The Australian futures contracts market is now pointing down 23 points, a decline of about 0.4 per cent meaning the market is expected to reverse Friday's gains when it opens.
"There's this ongoing worry about trade which is causing this consternation in investors," Dr Oliver said.
Namely, US President Donald Trump's tough talk on China which is still hanging over the market.
The president's deregulation has been good for US markets, and rubbed off on Australia's, Dr Oliver said - but the escalating trade war with China poses an ongoing threat.
All eyes will shift to the Federal Reserve Bank in the United States when it meets on Wednesday - local time - and likely raise interest rates to between 2 to 2.25 per cent.
"All things being equal it's why the Aussie dollar has been falling over this year," Dr Oliver said.
"Our Reserve Bank is on hold which makes it more attractive to park money in the US."
Dr Oliver is tipping the Australian dollar to continue dropping, reaching about 70 US cents by the end of the year. He says it would remain weak from there, potentially dropping into the high-60s early next year.
He said Australian interest rates won't move because the weakening housing sector - particularly in Sydney and Melbourne - will continue to fall for the next few years.
Source: Netwealth Morning Business Roundup
Serving up a Breakfast Pancake Stack along with your coffee this morning.
In consideration of others, PLEASE include the STOCK CODE in all your posts.
Happy trading, play nicely and make informed decisions.
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