Alumina miners lead ASX higher

Magellan Financial Group shares closed 7.8 per cent higher at $29.10 after it announced co-fiunder Hamish Douglass would be stepping down from his role as chief executive to become the company's chairman, switching roles with current chairman Brett Cairns. The company also reported its assets under management had declined slightly through September, falling from $74.6 billion to $74.5 billion.

Locally listed bond proxies led the market losses on Thursday as US 10-year Treasury yields hit their highest level since July 2011. Transurban Group led the market losses, closing 2 per cent lower at $10.98, Sydney Airport fell 1.8 per cent to $6.72 and Goodman Group closed at $0.9, down 10.20 per cent.

Gold miners fell on the market on Thursday, wiping some of their gains from the previous session after the price of the precious metal softened. Newcrest Mining was among the market's biggest weights, falling 1.7 per cent to $19.38. Northern Star Resources closed 2.9 per cent lower at $8.48, Evolution Mining fell 1.8 per cent to $2.68 and St Barbara closed at $3.48, down 3.8 per cent for the session.

Stock watch

Northern Star Resources

UBS said that Northern Star Resources' valuation appeared full as they lifted the company's target price from $8.00 to $9.00 and downgraded its rating to 'neutral' from 'buy'. The broker said that while there was a lot a of value to be unlocked on the back of the Pogo acquisition and there was the potential for the company to beat production guidance in FY19, the market had largely priced that in already. UBS said that there was a more balanced risk-return in the price now. The broker lifted the Pogo mine life in its model to 12 year, compared with its prior modelling of five years with current reserves of two to three years. They said that the revised mine life estimate values Pogo at $1.1 billion, well ahead of the $347 million acquisition cost and that the market was paying for this asset turnaround already.

What moved the market

Aluminium

The price of aluminium soared on Wednesday, hitting a three-month high after the world's largest alumina refinery, Alunorte, ceased production. The refinery had been running at 50 per cent capacity for the past seven months but the complete closure is expected to take 5 per cent of the world's alumina off the market, tightening the supply to aluminium producers. The price jumped 4.2 per cent on the London Metal Exchange, even as the US dollar advanced. The industry will now be closely looking at how the US decides to proceed with its sanctions against Russian aluminium miner RUSAL.

Brent crude

The price of crude oil trade with some volatility on Wednesday after data from the Energy Information Administration showed that there was an 8 million barrel increase in inventories during the ast week. Saudi Arabia also announced that they had raised output to 10.7 million barrels per day in October, falling just shy of November 2016's record levels. Despite this, Brent crude rose above $US86 a barrel, hitting a four year high as market speculators bought the dip. Analysts say that Saudi Arabia will have to lift its production output by a lot more than it has done in order to offset the losses from Iran.

US dollar

The US dollar advanced on Wednesday night on the back of strong economic data. The US ISM non-manufacturing index rose to a 21-year high of 61.1 in September. A bigger than expected increase in the ADP measure of private payroll employment is also indicating that non-farm payrolls could come in well ahead of a consensus gain of 184,000. Comments from Federal Reserve chairman Powell also served to lift the dollar higher as he warned that the Fed may raise rates beyond the neutral rate. US 10-year Treasury yields hit their highest level since July 2011, rising to a high near 3.18 per cent.

Trade surplus

Australia had a $1.6 billion trade surplus in August, exceeding consensus expectations of a $1.4 billion surplus. It was the eight consecutive monthly trade surplus for Australia although analysts said the first signs from the drought were beginning to show through. Meat exports rose during the month but crop exports were lower and there could be some further falls in the coming months. "We expect trade surpluses can continue although the size could be limited as imports recover and capacity constraints (outside LNG) could limit non-rural exports," said CBA senior economist Belinda Allen. "The drought will also continue to impact rural export numbers."