ASX rallies late to finish day's trading firmer, breaking a stretch of declines
Australian shares rose on Wednesday, avoiding a fourth straight day of losses. Predictions of a strong start to the day after a strong close on Wall Street were proven wrong but the market was able to recover throughout the day with the S&P/ASX 200 index ending up 0.2 per cent at 5761.4 points.
A rebound in New York trading failed to translate to the ASX, which within a half hour of trading had fallen to a low of 5729. The market echoed what happened on Tuesday with the major banks dragging early, and the mining sector recording some strong, early gains. Copper prices were up overnight helping Sandfire Resources to a 4.25 per cent gain. Western Areas and CSR were also up with both recording gains above 2.5 per cent.
Announcements by Nestle may have spooked Bellamy's Australia and The A2 Milk Company last week but both were among the strongest performers on the market today. Bellamy's was the biggest mover on the day gaining 7.1 per cent while A2 had another day of strong gains, up 5.1 per cent for the day.
ANZ recorded its eighth day of losses in a row and was the only major bank to finish in the red. Westpac, NAB and Commonwealth all clawed their way above the day-earlier close with all three making a late charge after posting early losses.
Retail Food Group posted the biggest loss of the day, shedding 9.7 per cent. G8 Education also fell on news that ASIC has brought 30 charges against their former chairwoman Jennifer Hutson. Ms Hutson resigned in 2015 in the wake of a failed takeover attempt of Affinity in July of that year.
In other news, a better-than-expected retail report helped the Australian dollar climb above US77¢. Data from February shows retail sales rose 0.6 per cent, bettering the 0.3 per cent that analysts were expecting. Department stores bounced back to climb 1.5 per cent following several months of decline.
In the US, a late rally on a volatile day of trading helped the major benchmarks end higher. The Dow Jones Industrial Average rose 1.7 per cent, the S&P 500 climbed 1.3 per cent and the Nasdaq finished up 1 per cent. Amazon finished 1.5 per cent higher despite President Donald Trump accusing the company of costing the American taxpayer billions.
In Asia, early trading was mixed as investors pondered how the latest tariff announcements would affect the market. China's Shanghai Composite added 0.3 per cent while Japan's Nikkei 225 gained 0.3 per cent after posting losses in early trading.
Stock watch
CSR
Brokers are divided over the future of manufacturing company CSR with Bell Potter and Macquarie both offering opposing investment strategies. Bell Potter have given the company a "sell" recommendation saying that its earning were highly leveraged to the residential housing market and aluminium prices. The brokers said that while both of these factors had been moving in the right direction for the past 12 months, they were forecasting a moderation in activity levels over the medium term. Bell Potter gave the company a price target of $4.30, well below the $5.60 price target predicted by Macquarie. Macquarie gave CSR an "outperform" recommendation saying that earnings visibility is better than consensus expectations. They said that the company's trading performances remained better supported by market conditions and that a strong balance sheet had meant they had upgraded their target price from $5.15.
What moved the market
House prices
Australian house prices fell for the sixth consecutive month in March with Sydney's house prices down 4 per cent since August. National house prices fell 0.2 per cent for the month with prices down 0.8 per cent for the year. The broader housing market looks to have stabilised with auction clearance rates up, and days on market and vendor discounting remaining unchanged. Analysis from Morgan Stanley suggests that the rest of 2018 looks challenging with risks still skewed to the downside. Increasing stock of properties to be settled and uncertainly over government policy is giving the broker a cautious outlook for the rest of 2018.
Aussie dollar up
The Australian dollar firmed on Wednesday following better-than-expected retail sales data. The $A started the day lower against its US counterpart but rose on the February retail sales report. Analysts had originally predicted a 0.3 per cent rise, following a 0.2 per cent rise in January, but sales jumped 0.6 per cent on the month. "All industries saw rises in February led by household goods retailing, food retailing, cafe's restaurants and takeaways, and clothing, footwear and personal accessories," said Ben James, director of Quarterly Economy Wide Surveys at the Australian Bureau of Statistics. The solid growth in February is a positive sign for retail and will ease fears that first quarter consumption may soften significantly according to NAB.
Copper
Copper prices reached a one-week high overnight, shrugging off concerns of a trade dispute between the US and China. Investors appear to be buying on the expectation that the dispute won't undermine metal trades. Benchmark copper on the London Metal Exchange finished up 1.2 per cent at $US6,796 a tonne. China on Sunday announced tariffs on $US3 billion in imports of US food and other goods in response to US tariffs on imports of aluminium and steel. Despite this, analysts say that China's response wasn't as aggressive as some were predicting and that the impact on the country's metal imports was likely to be less dramatic.
Asian Markets
Asian Markets are still pondering just how they will react to the latest tariff announcements as the trade skirmish intensifies between the US and China. The US released the tariff list on Chinese products, focusing on high-tech items as it aims to minimise the impact on US consumers. Beijing has vowed that it will respond with China's Ministry of Commerce saying it was "ready to take counter measures on U.S. products with the same intensity and scale." Traders are awaiting China's response leading to a mixed reaction on the Asian markets. South Korea's Kospi index fell, losing 1.4 per cent as did Hong Kong's Hang Seng Index which fell 0.2 per cent. The Shanghai Composite Index rose 0.7 per cent.