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Markets Live: Harvey Norman sparkles

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Asian equities mostly advanced on Wednesday, helped by an encouraging start to the US earnings season.

The Nikkei 225 climbed 1.3 per cent in Tokyo, the Hang Seng Index rose 0.2 per cent in Hong Kong.

The CSI 300 dipped 0.7 per cent on Chinese mainland. Chinese automakers fell after China moved to allow foreign players to take full ownership of their local ventures.

The People's Bank of China late Tuesday announced a cut in the reserve requirement ratio for banks, part of its efforts to support credit amid a crackdown on shadow lending and China's 10-year bond yield fell the most since June.

Japanese stocks got a boost after the yen fell amid signs the US and North Korea are making progress on a summit.

Investor sentiment got a boost from geopolitics, with President Donald Trump saying the US and North Korea have already started direct talks at "extremely high levels" in advance of a planned meeting between the two nations' leaders this summer.

China's steel futures climbed more than 2 per cent on Wednesday, on track for their biggest daily gain in three weeks, after the country's central bank announced it would cut the cash banks hold as reserves.

The People's Bank of China late on Tuesday unexpectedly said it would cut the reserve requirement ratio (RRR), the amount of cash that most commercial and foreign banks must hold as reserves to pay back medium-term lending facilities, by 100 basis points for most commercial banks.

"The cut in RRR helps to relieve pressure in capital markets and boost optimism over the macroeconomy," said Xu Bo, analyst at Haitong Futures.

The most-active construction rebar futures on the Shanghai Futures Exchange had gained 2.4 per cent to 3,471 yuan ($552.17) a tonne by GMT 0158, set for their strongest one-day advance in three weeks.

- Reuters

Citi took a look at the oil sector and the winners and losers across its global coverage.

"We are not bullish oil however we are bullish energy equities," the broker said .

It believes that current valuations are trying to price in disruptive changes in the energy system on an "unrealistic" time scale and understate the increasing competitiveness of oil and gas assets versus energy alternatives.

It ranks Oil Search among the losers saying that it belongs to a group of oil companies "where we think the market fails to price in portfolio shortfalls."

OIl Search shares are up 1.9 per cent at $7.68, with the shares recovering almost all of a 2 per cent drop made in the previous session after slashing its output guidance by more than expected.

China's home prices rose at the fastest pace in three months in March, fuelled by gains in smaller cities, even as the government maintained a two-year campaign to cool the housing market.

New home prices across 70 cities gained 0.42 per cent from a month earlier, according to Bloomberg calculations based on Wednesday's data from the National Bureau of Statistics. That compared with a 0.25 per cent increase in February.

The biggest gains came in the smaller so-called third-tier cities, where buying restrictions are looser and a push by the government to redevelop slums is giving an extra boost to demand.

Officials are trying to tame prices across the country without causing any excessive property slowdown. Prices rose 0.94 per cent in those smaller cities.

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Commonwealth Bank of Australia may look to sell down 70 per cent or more in an ASX listing of its $4 billion global asset management arm, Joyce Moullakis reports.

A divestment of 70 per cent to up to 100 per cent is not out of the question, sources told The Australian Financial Review.

CBA told the market on Tuesday it would push ahead with a float of CFSGAM, which has $219 billion under management.

On Wednesday CBA's stock was 0.5 per cent lower. The bank is also the latest firm to appear at the royal commission into financial services.

AMP shares are down almost 7 per cent this week at $4.45 after executives at the wealth manager faced questions at the Royal Commission into the financial services sector.

The AFR's James Frost writes today that AMP is charging thousands of unsuspecting platform users for advice fees despite not receiving permission from the underlying customers as required by law.

It has also found a way around the banning of fees being charged for shelf space on platforms charging fund managers annual fees under the guise of "comprehensive reporting" and a "fund managers administration fee".

Following the introduction of the Future of Financial Advice reforms which banned most commissions, advice fees could only be charged to customers who had chosen to "opt-in" to the charge from 2013.

The Hayne royal commission however heard on Wednesday that AMP had no way of checking whether AMP's financial advice customers had given the all clear to be charged the substantial fee which could be as much as 4 per cent.

The ASX is holding onto early gains at lunchtime, with miners, energy stocks and consumer discretionary companies advancing,

The ASX/S&P 200 index is up 12 points, or 0.2 per cent, at 5853 while the All Ordinaries is up 14 points, or 0.3 per cent, at 5949. The Australian dollar is trading at US77.63¢.

Rio TInto is the top performer in points terms, up 1.8 per cent, after updating investors on quarterly performance. BHP, which reports tomorrow, is up 0.5 per cent.

Woodside also released quarterly numbers today and the energy firm rose 1.2 per cent in midday trading.

Other energy-sector advancers include Oil Search, up 2.4 per cent, and Origin Energy, up 1.3 per cent.

South32 is advancing 1.8 per cent, Aristocrat is up 2 per cent and BlueScope Steel is higher by 3.3 per cent.

Retailer Harvey Norman jumped 4.2 per cent after an upgrade at JPMorgan.

On the downside, banks are lagging again as investors continue to fret about ongoing revelations at the royal commission into the sector, with CBA shares down 0.7 per cent, Westpac also down 0.7 per cent. ANZ lower by 0.3 per cent and NAB down 0.4 per cent.

AMP is down another 1.5 per cent and NAB spin-out CYBG is down 4.8 per cent after telling shareholders it will lift provisions relating to PPI claims in the UK.

CYBG shares are down 5.9 per cent today and it's the worst performer in percentage terms on the S&P/ASX200.

The parent of British banks Clydesdale, Yorkshire and app-based bank "B" said that it expects to increase provisions relating to legacy costs for payment protection insurance by around 350 million pounds ($645 million).

CYBG said that its review of final PPI cases was more complicated and time-consuming than previously expected.

It also commented that complaints rose to a higher-than-expected 59,000 in the six months to the end of March, peaking in January.

"The elevated level of complaints has been driven by a combination of factors including heightened media coverage, the FCA advertising campaign and increased activity by claims management companies," it said.

It added that it expects current level of complaints to remain at an elevated level for a period of time before reducing in volumes and costs by August 2019.

CYBG said it expects to recognise a pretax charge of 202 million pounds in its income statement for the six month period ended 31 March 2018 which is expected to result in a pro forma reduction in the Group's Common Equity Tier 1 ratio of approximately 100 basis points as at 31 December 2017.

CYBG was spun out of National Australia Bank in 2016.

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Harvey Norman shares are surging today, with the retailer up 4.2 per cent at last check.

Earlier in the day, the shares were up as much as 6.9 per cent at $3.58 - the best one-day performance for the retailer since August 2014.

The gains came after the company was upgraded to neutral from underweight by JPMorgan analyst Shaun Cousins and follow a 23 drop in the shares over the past year.

"We believe there is an absence of positive catalysts and earnings risk is skewed to the downside, but valuation support is now emerging at the current share price levels," the analyst said.

The broker listed four reasons it became more positive on the stock including: valuation support; dividend support; a subdued outlook in existing earnings forecasts; and modest costs from dairy ventures.

The broker cut its target price to $3.65 from $3.75.

"The bulls have been silenced but not defeated," says Michael Hartnett, Bank of America Merrill Lynch's chief investment strategist.

He made that comment in the bank's monthly fund manager survey which showed that more than three-quarters of the global fund managers surveyed each month see room for equities to run still higher.

The latest survey, conducted April 6 to 12, found that 40 per cent of respondents believe equities will peak in the second half of this year and another 39 per cent forecast the peak will take place in 2019 or perhaps further out. Eighteen per cent said the peak has already been reached.