ASX edges towards 10-year high

WorleyParsons shares rose 4.3 per cent to $17.10 on a positive broker note. Citi retained its "buy" recommendation for the stock, upgrading its target price from $17.50 to $18.50 on the back of an improving market outlook.

Pendal Group's shares rose after the company delivered record half-year profit growth.

Underlying cash profits increased 30 per cent to $114.5 million, the average funds under management grew 14 per cent to $98.6 billion and performances fees for the half were up 70 per cent in year on year teams to $47.6 million. Its shares rose 6.4 per cent to $9.79.

Blue Sky Alternative Investment shares shot up on news that chairman John Kain would step down. It closed the day up 18.3 per cent at $2.97.

A broker downgrade for CSR saw its shares fall 3 per cent to $5.25. Morgan Stanley said the company's earnings appeared to have peaked and an overall decline in the Australian housing construction market would affect the company's bottom line.

Link Administration shares fell 8.4 per cent to $7.24. The company released a report on Thursday indicating that changes to superannuation announced in the federal budget was likely to impact revenues.

Greencross fell 6.9 per cent to $3.89 following an earnings downgrade on Wednesday. A Credit Suisse note on Thursday said that future earnings for the company looked poor given the competitive industry space and the excessive debt the group is carrying.

While the equity market continues to strengthen, the broader economic outlook isn't so positive. On Thursday, Citigroup pushed out the timing of its forecast for the Reserve Bank of Australia's first rate rise this cycle to the first quarter of 2019 from the fourth quarter of 2018. It has attributed this to "greater uncertainty around the likely speed of the return to full employment and mid target inflation" in the economy.

Stock watch

CSR

CSR has been downgraded to "underweight" by Morgan Stanley who say that the company's earnings appear to have peaked. The company, which closed trading on Thursday at $5.25, was given a price target of $4.75 by the broker despite CSR's Building Products business performing better than forecast. While Morgan Stanley acknowledged the positive results of the company, it indicated it was at the height of its cycle and that it wasn't likely to improve. The broker described CSR's EBIT of $3.5 million as "disappointing" and said that issues for the company would continue to persist, adding that a path to adequate returns was unclear for the next financial year. An overall decline in the Australian housing construction market will be the main impact on the company with only a one-off spike in property sales the only thing that could change the company's fortune.

What moved the market

US PPI

US Producer Price Index from the Bureau of Labor Statistics rose moderately during April but still fell below expectations. US PPI for final demand rose 0.1 per cent in April on seasonally adjusted terms but growth has been softening since January when final demand prices were up 0.5 per cent from December. Final demand prices had advanced 0.3 per cent in March and expectations were that April's result would be the same. The index for machinery, equipment, parts, and supplies wholesaling climbed 0.9 per cent and was a major factor in the advance in final demand services. The latest data is unlikely to have much of an affect on the market according to NAB analysts.

NZ Dollar

The New Zealand dollar has fallen across the board as New Zealand interest rate expectations adjusted lower as the Reserve Bank of New Zealand takes a more cautious approach to growth. Their outlook remained more even than the Reserve Bank of Australia, saying that the next cash rate move could be up or down. The bank's own projections are predicting an official cash rate of 2 per cent in the first quarter of 2020. New Zealand is also experiencing subdued wage growth, keeping inflation down. The RBNZ is predicting that headline CPI inflation will reach 2 per cent in the fourth quarter of 2020 instead of the third quarter.

Zinc

Zinc on the London Metal Exchange finished 1 per cent higher at $US3,091 a tonne as it recovers from an eight month low during last week's trade. Zinc's use in steel production had been the commodity's catalyst for falling as uncertainty over steel demands from China continued. But analysts are now saying that steel outputs will begin to increase as steel inventories decline, helping the price of zinc and other raw materials rise. China's refined zinc production rose 2.1 pc in April from a month earlier to 377,000 tonnes according to research house Antaike. Zinc prices are down 8.3 per cent for the year to date.

Iranian rial

The value of the Iranian rial has plummeted in recent months as talk of sanctions hit the Islamic Republic. According to the country's Central Bank data, the currency has dropped 9.9 per cent in the last month. On April 9, 1 US dollar was buying 37,830 rials however the Central Bank is now reporting that as of May 9, it is buying 42,000. According to Reuters however, local dealers in Tehran have reported prices of up to 80,000 rials. While the currency has been sliding for several months on the back of a weaker economy, the value spiked as demand for the US dollar increased on fears the country's export of oil and other goods would shrink.