ASX breaks 6,000 as the major banks lead
The S&P/ASX 200 index has finished above 6,000 points for the first time since late February, despite early predictions that the market would fall after a drop on Wall Street.
The index finished the day at 6,015.2, advancing 32.5 points, or 0.5 per cent, as the major banks led the marker higher.
A scathing report from APRA wasn't enough to turn investors away from Commonwealth Bank. Shares in the company rose 1.9 per cent to $73.17 despite the report saying that "CBA turned a tin ear to external voices and community expectations about fair treatment".
ANZ released its half-yearly report, revealing a mixed start to 2018 from the bank. The report warned that revenues would tighten in the future as regulation increased. Despite this, shares were up 2.4 per cent at $27.47.
IOOF shares also rose 4.7 per cent to $9.39 on the back of this report following positive performances from the ANZ businesses it is due to acquire later in the year.
NAB closed the day up 1.7 per cent at $29.45, while Westpac advanced 1.4 per cent to $29.05.
BHP Billiton climbed to $31.25, a gain of 1 per cent. Rising oil prices, along with broker upgrades from Citigroup and Goldman Sachs helped the stock climb.
Wisetech Global updated its 2018 financial year guidance of revenue growth of 37 per cent to 43 per cent on the back of business expansion, sending its shares up 5.3 per cent to $10.57.
A presentation to Macquarie by IPH's chief executive Andrew Blattman sent the stock price climbing. The presentation showed IPH had a strong balance sheet and underlying revenue growth was high. It finished the day at $3.84, up 4.9 per cent.
GrainCorp fell 5.4 per cent to finish at $8.41 after it's recommendation was downgrade to neutral by Credit Suisse giving the stock its biggest single day loss this year.
Independence Group's quarterly results revealed that the company's Jaguar Operation disappointed with a lower-than-expected mined tonnage and grade. It finished down 4.8 per cent at $4.92.
Ramsay Health Care fell 4.5 per cent to $61.78 after it was announced chief executive Craig McNally had sold 18 per cent of his total stake in the company.. On Monday, Credit Suisse said that the stock could suffer in the future in the face of rising bond yields.
Stock Watch
Qantas
Citi has initiated its coverage of Qantas, giving it a "buy" recommendation and a target price of $7.50. Citi analyst Jake Cakarnis is forecasting $800 million worth of buybacks in the next two years, underpinned by huge cash generation on the back of strength in its domestic business. " A rational operating environment in the domestic market should see Qantas deliver 90bps of margin expansion from improved operating leverage from unit revenue growth (RASK) ahead of unit cost (CASK) growth," he said. "While we acknowledge the benign cost environment for Qantas is over, we expect that strength of the domestic business will be the key driver over the medium term underpinning Qantas' appeal as a cash cow." On Monday, Credit Suisse appraised the stock, suggesting investors should consider buying into Qantas as bond yields rise in order to avoid the affects of a 'bondcano'.
What moved the market
Dwellings down
CoreLogic house price data released today has shown capital city dwelling prices fell for the sixth consecutive month in April, down 0.3 per cent. This now takes the annual growth rate into negative territory at -0.3 per cent. Unit prices are performing well, up 1.9 per cent compared with detached houses which are down 1 per cent. CBA analysts suggest that strong population growth in Melbourne and Sydney is helping to hold up unit prices. Dwelling prices in Sydney have fallen for eight consecutive months with prices down 4.3 per cent from their mid-2018 peak. In Melbourne, prices have fallen for five consecutive months now with analysts noting that the slowdown in lending is hitting the two major capital cities the hardest.
Brent crude
Oil prices jumped on Tuesday after Israeli Prime Minister Benjamin Netanyahu claimed his country has half a ton of Iranian documents proving Tehran was operating a secret nuclear program. Despite denial Iran denying that is had intentions to build a bomb, Netanyahu's comments could push the US to abandon its 2015 nuclear deal with Tehran and impose sanctions on the country. These sanctions could potentially cut off up to 10 per cent of the world's oil supply, sending oil prices surging. Brent crude jumped to its equal highest level since 2014, hitting a high of $US75.40 before finishing the session at $US74.69. President Trump has less than two weeks to decide whether the US will pull out of the Iran nuclear deal.
US dollar
The US dollar is approaching make or break levels as it defies consensus to climb higher. The greenback has advanced almost 3 per cent since April 17 and is now just 0.3 per cent down on the year-to-date. The US Dollar Index is closing in on its 200-day moving average, a level it hasn't touched since May 2017 and one that could be critical in determining whether the dollar will continue rise or instead, fade away. The index is hovering close to four month highs, awaiting critical data due to be released this week. The Federal Reserve's is widely expected to hold on it's policy decision but investors will be hoping for an indication of a possible rate hike in June.
Manufacturing
Manufacturing has begun the second quarter of 2018 on a positive note according to the CBA Manufacturing PMI. The Manufacturing PMI for the month rose from 54.3 in March to 55.5 in April, a positive sign for the wider economy too. Analysis of orders, jobs and output expectations are also sending positive signals for the remainder of 2018. The cyclical nature of manufacturing activity means turning points can provide warning signs of future business trends. Analysts did note that capacity pressures were evident in the rundown of finished good stocks which was lengthening supplier delivery times and increasing backlogs.