ASX closes higher on gold miners

Base metal prices lifted across the board also, helping the major miners closed higher. BHP Billiton led the market gains, closing the session 1.1 per cent higher at $35.08 while Rio Tinto lifted 1.8 per cent to $79.50 and South32 rose 1.3 per cent to $3.96.

The major banks were mixed on Wednesday with only very mild gains and losses for the big four. Commonwealth Bank closed just 0.1 per cent higher at $69.61, Westpac fell 0.3 per cent to $27.15, NAB went down 0.7 per cent to $27.20 and ANZ closed at $27.44, down 0.2 per cent.

CSL led the market losses, continuing its fall below $200. The blood giant has been on the slide for the past month after it hit a record high of $230.28 on September 4. CSL closed at $198.52, down 0.4 per cent for the session.

Fortescue Metals Group was among the market's biggest weights on Wednesday after Morgan Stanley initiated coverage on the company with an 'underweight' rating and a price target at a 15 per cent discount to its Tuesday closing price. The broker said a recent fall in price realisation was set to continue and there were likely to be negative earnings revisions. Fortescue shares closed 4.1 per cent lower at $3.72.

Stock watch

IOOF Holdings

Bell Potter lifted its appraisal for IOOF Holdings, increasing its recommendation for the company from 'sell' to 'hold' and upgrading its price target for the financial services company. The broker said it was revisiting the stock following confirmation it has assumed ownership of the ANZ Aligned Dealer Groups and paid $800 million for an 82 per cent economic interest in the ANZ One Path Pensions and Investments business. The analyst said that they had upgraded its underlying EPS for the next three years by 4.2 per cent, 0.8 per cent and 0.7 per cent respectively, driven by the flagged coupon payment of 14.4 per cent on $800 million for the six months between 30 September 2018 and 31 March 2019. Bell Potter upgraded its price target for IOOF Holdings from $7.61 to $7.70

What moved the market

Brent crude

Capital Economics market economist Oliver Jones believes that the price of Brent crude oil could experience a sharp softening to close the year as investors' fears about supply prove unfounded and demand begins to slow. Mr Jones said he was expecting that Brent crude would fall to about $US70 a barrel by the end of the year and continue to soften through 2019, hitting $US60 a barrel by the end of that year. He said that concerns over Iran's output falling were overdone and that increases elsewhere in the market were likely to offset that fall. He said he expected US and China demand to also slow.

Aluminium

Aluminium lifted 1.6 per cent on Tuesday to be the best performing base metal on the London Metal Exchange, recovering above $US21,000 a tonne, as concerns over supply tightness in Brazil persist. The Alunorte refinery is the largest alumina refinery in the world but is facing an uncertain future with output at the site cut by 242,000 tonnes a month since March 1 due to environmental concerns. The refinery could take a year to return to normal production and this, coupled with some closures for the Chinese winter and falling LME inventories, has pushed the price slightly higher.

Euro

The euro fell on Tuesday night on concerns that Italy could be looking to hop out and adopt its own currency. The Euro fell below $US1.151 for the first time in over a month as the head of Italy's lower house budget committee Claudio Borghi noted that Italy could be better off using its own currency. "I am more convinced that Italy, with its own currency, would be able to resolve its [fiscal] problems," he said. Prime Minister Giuseppe Conte seemed less convinced, saying that "euro is our currency and is irreversible for us." It's hard to see a move away from the euro however, with support for the currency within Italy steadily improving in the past few years.

Dwelling approvals

Housing approvals for August fell sharply during August, continuing on from another big fall in July. Total home approvals fell 9.4 per cent for the month, well below market expectations of a 1 per cent rise. ANZ senior economist Felicity Emmett said that stricter lending conditions were likely behind the fall. "Tighter credit conditions are the main reason we expect dwelling approvals to continue to trend lower in the near term, consistent with the near-term signal from the housing finance data," she said. "Non-residential approvals were also weak in August, with the value of approvals down 24 per cent, reversing the strong gain in July."