Big four banks help ASX climb amid easing trade war concerns
The Australian markets enjoyed a second day of growth with major banks making gains while the big mining companies fell.
Market watchers were optimistic that tensions between the US and China won't escalate into a full-blown trade war with US officials suggesting a willingness to come to the negotiating table.
The S&P/ASX 200 rose on Thursday, helped by positive performances from the big four banks.
Photo: Sasha WoolleyEarly indications on Thursday morning that Australian shares were positioned for a higher open proved true with the S&P/ASX 200 climbing early. The index finished on 5788.8 points up from 5761.4 points on Wednesday.
The major banks helped the index climb 17 points, as ANZ snapped losses with its first gain in eight days, up 1 per cent.
How the ASX moved on Thursday.
Retail Food Group was the biggest mover today, recovering from its big loss of 10 per cent on Wednesday to rise 10.7 per cent.
Mineral producers Orocobre posted the biggest loss, down 9.5 per cent to $4.74 after it downgraded its lithium production guidance for this financial year by 10 per cent.
Blue Sky slumped over 33 per cent to $5.62 after US short seller Glaucus slammed the company's defence as inadequate. Blue Sky has disputed Glaucus' allegations.
Stocks in New York rallied late amid easing concerns of a trade war between the US and China with a growing consensus betting that both nations would attempt to resolve differences. The Dow had taken a dive of more than 2 per cent in early trade but made gains throughout the day to finish up 1 per cent. The S&P 500 also gained 1.2 per cent while the Nasdaq was up 1.5 per cent.
Stocks in Asia reacted to news from Beijing that China was considering a $US50 billion list of goods for possible tariff hikes. Hong Kong's Hang Seng index lost 2.2 per cent, while the China Enterprises index dropped 2.3 per cent with most sectors falling apart from the consumer sector, which it is believed, will largely be unaffected by any escalating trade dispute.
The Australian dollar enjoyed strong growth against the US dollar on Wednesday night before edging 0.3 per cent lower on Thursday to US76.92¢.
What moved the market
Stock watch - Perseus Mining
Gold producer Perseus Mining may have turned the corner and achieved operational consistency at its Edikan gold mine, according to UBS, which upgraded the stock's rating from "neutral" to "buy." The broker lifted Perseus's target price by 67 per cent to 55c reflecting the company's turnaround in performance. The successful on time delivery and on budget delivery of its second mine at Sissingue sees less risk in its outlook. With Perseus now holding two active mines in Africa, the broker is predicting strong growth in revenues if it can successfully manage both mines. UBS says that if Perseus can achieve operational consistency, investors might pay up early for a third mine at Yaoure.
ASX suffers
The Australian market underperformed last month against its global counterparts, finishing March down 4.3 per cent. The underperformance saw the market experience its worst quarter since September 2015, dropping 5 per cent since January. The drop in the market was largely driven by fears of a trade war between the US and China according to Macquarie with concerns over the risks to global growth rising. Dividend imputation reform may have also played a part according to Macquarie. The telecommunications, financials and materials sectors were the worst performers during March with no sector able to deliver a positive return during the month.
Gold
A weaker US dollar has helped gold to a one-week high with trade war concerns also helping to push the price up. Investors looked to gold as stronger safe haven demand was driven by the prospect of a US-China trade war. Gold prices did fall on Thursday though with fears of a full-blown trade war easing with neither side giving an indication as to when their proposed tariffs would take affect and the Trump administration signalling a willingness to negotiate with China.
Dollar recovery
The Australian dollar enjoyed good growth Wednesday night rising to US77.16¢ on the back of news that the Trump administration would hold talks with Beijing in a bid to resolve the escalating trade war. The dollar performed particularly well against the euro in the past week recovering well after dipping to its lowest point in a year in late March. Prices had been hovering around the 62.3 euro cents mark in early April before climbing higher in the past two days. Overnight, the dollar jumped to a high of 62.88 euro cents with a softer Eurozone core consumer price index inflation helping to support that recovery. On Thursday, the Australian dollar had dropped off from its high slightly and was buying 62.78 euro cents.
US Oil
The energy sector performed well on Thursday with Australia's benchmark energy index recording gains of up to 1.1 per cent. That helped the index climb to its highest point since February 28. Oil prices were also up on the back of US data showing a reduction in crude oil inventories. US West Texas Intermediate crude for May delivery was up 0.4 per cent at $US 63.64 a barrel. This helped Caltex to notch a gain of 1.62 per cent to $31.93, with Whitehaven Coal the a loss for the energy index down 2.3 per cent. Up to Wednesday's close, the energy index had fallen 5.6 per cent this year as compared with the S&P/ASX 200 index which dropped 5 per cent.
with Reuters