Banks lead ASX advance

Orocobre released its quarterly report of operations for the March quarter sending its shares up 3.9 per cent to $5.65. The report showed positive results in its Olaroz Lithium Facility with gross cash margin up 21 per cent.

Pilbara Minerals performed well off the back of news that Australia was tipped to soon produce more than half the world's lithium. The company, which is expected to soon boast one of the world's largest lithium mines, finished the day at 92¢, up 3.4 per cent.

Boral recovered from last week's losses following its March quarter results, to close 4.4 per cent higher on Monday to $6.88. Macquarie said it was still maintaining its outperform recommendation for the company.

Sandfire Resources fell 2.7 per cent to $7.94 after Morgans and Deutsche Bankdowngraded their ratings for the company.

Resolute Mining dropped 3.4 per cent to $1.15, posting its sixth straight session of losses. The company has shed more than 14 per cent since April 19.

Domino's Pizza Enterprises fell 3.9 per cent to $42.17 following fears that its franchisee store-split strategy could be flawed after a report in The Australian Financial Review on Sunday revealed its franchisees were struggling to generate profit through the model.

Stock watch

GrainCorp

Bell Potter has downgraded GrainCorp's recommendation from "hold" to "sell" with analysts saying that there has not been an overly optimistic start to the season. While the broker says it is normally comfortable take on seasonal risk in annual crop exposures in weak conditions,it doesn't see an underlying expansion ofthe cycle return on invested capital. GrainCorp has made a number of crop related earning downgrades over the past 12 months. While investors are signalling a stronger 2018-19 season, Bell Potter has its doubts, saying that both upper and lower soil moisture levels across the central and southern east coast grain belt are below average and that a strong finish to the season could be required to achieve normal yields. Currently trading at about $8.93, the broker has issued the company a $7.50 price target.

What moved the market

Interest rates

The market is pricing in a zero per cent chance of interest rates changing when the Reserve Bank of Australian Board meets on Tuesday. This will mean the cash rate has been at the record low of 1.5 per cent for the 22nd consecutive month, with some economists predicting that the rate could remain on hold for at least another 12 months. Capital Economics economists Paul Dales and Kate Hickie are predicting that the RBA won't increase the cash rate until 2019 and that even then, growth will be slow due to high household debt. Capital Economics is predicting that the cash rate will remain below the "emergency" 3 per cent level until at least 2021.

Aluminium

Aluminium could be set to fall further from this month's multi-year highs on the news that Russian aluminium giant Rusal is preparing to overhaul its board and management in the hop of avoiding US sanctions. Aluminium prices have fallen in the past week as the US gave Russian companies more time to adjust to the impending sanctions. Oligarch Oleg Deripaska, who owns a controlling interest in Rusal's parent company EN+, is reportedly preparing to relinqush control of the company and resign from the board, a move which will settle global aluminium prices. It's put Rusal in a dire situation however, as the company could be forced to halt aluminium exports for good if the planned overhaul fails.

Aussie Dollar

The Australian dollar has recovered slightly against the US dollar on Monday after US stocks finished flat on Friday and European markets gained. CBA senior currency strategist Joseph Capurso maintains a mildly bullish outlook for the Australian dollar. He says that stronger real GDP, along with improving global economic growth and a favourable Australian balance of payments backdrop will help the Aussie dollar rise against a depreciating US dollar. CBA says that the US dollar is continuing its fundamental downtrend with Fed funds rate rises largely priced in. Mr Capurso says that negative Australia-US two-year bond yield spread will only be a minor headwind for Australian dollar growth.

Financials

The financial sector was the best performing on the market on Monday with the banks expected to unveil their results in the coming few days. Citi analysts say that while the banks could have further pressure place on their earnings growth, it said that the loan losses from the major banks would remain low and that this could attract investors. "In the absence of material loan losses together with a steeper challenge to grow mortgage RWAs, the bank dividends are, perversely, likely to rise. This will provide valuation support, making current shares price increasingly attractive." The major banks led the ASX on Monday, adding a combined 15.4 points to the index.