BusinessNow: Live coverage of financial markets and companies, plus analysis and opinion
With its share price surging more than 4pc today, NAB is in favour among top analysts.
- Trump trading? Analysts split on what to do next
- Bankers and miners keep the party going
- Santos surges on handy premium
- Kerr Nielson is eyeballing China’s trash and treasure
- Woolies could recover in petrol sale
- Trump result favours banks over resources
Welcome to the BusinessNow blog for Friday, November 11. The Trump ascendancy continues to dominate markets. In Australia Lendlease is holding their AGM, while the Sohn Hearts and Minds Conference takes place at the Sydney Opera House.
7.33pm:European stocks rebound in early deals
European stock markets rose at the open on Friday, rebounding from the previous session’s losses as a choppy trading week triggered by Donald Trump’s election win comes to a close.
London’s benchmark FTSE 100 index climbed 0.3 per cent to 6,845.52 points compared with Thursday’s finish.
Frankfurt’s DAX 30 won 0.7 per cent to 10,702.88 points and the Paris CAC 40 advanced 0.3 per cent to 4,545.05.
7.31pm: Why Apple’s firming as a favourite
Andrew White
Apple’s transformation from a technology company to a subscription-driven services company has earned it a place as a firm favourite for one of the country’s most successful fund managers, Magellan Financial Group.
Magellan chief executive and chief investment officer Hamish Douglass noted the stock was trading at a 30-40 per cent discount to the US market after a poorly-received launch of wireless buds to go with its jack-free iPhone 7.
Speaking by video from the US, Mr Douglass said the company had developed “a whole ecosystem of immense scale — around its apps, payment services and wearable devices that was not fully appreciated by the market.
“It is one of the most strategically advantaged monopolies in the world and it is going to grow into the future,’’ Mr Magellan told the Sohn Hearts & Minds conference at the Sydney Opera House. Read more.
6.54pm: Which small caps can beat the turbulence?
Tim Boreham
As the large-cap stocks whipsaw on the great unanswered question of our time — what does Donald Trump really mean for markets? — the inherently riskier small to mid-sized sector suddenly presents an unlikely safe harbour for yield chasers.
The trick is to find the right mooring points — small cap stocks with sustained earnings and a proven dividend record — in a waterway strewn with shipwrecks which is notoriously hard to navigate.
“There are the funny little opportunities you can find when no one else is looking,’’ DMX Capital Partners’ stock picker Simon Turner says.
On DMX’s analysis, only one-quarter of the 1349 ASX entities with a market cap of up to $250 million are profitable, while only 14 per cent pay dividends. Read more.
6.35pm: Tokyo stocks edge higher
Tokyo stocks edged higher Friday after two days of wild trading that followed Donald Trump’s surprise win in the US presidential election.
“We’ve got through the biggest cause of uncertainty, the US presidential race, and Congress is controlled by business-friendly Republicans,” Juichi Wako, a senior strategist at Nomura Holdings, said.
The benchmark Nikkei 225 index -- which rallied almost seven per cent on Thursday after initially sinking on Trump’s victory -- added 0.18 per cent, or 30.37 points, to end at 17,374.79. Over the week, it rose 2.78 per cent.
The broader Topix index of all first section issues was up 0.14 per cent, or 1.93 points, to 1,378.28. The index gained 2.32 per cent this week.
“Prospects of greater US fiscal spending (infrastructure and tax cuts) under a Trump presidency continue to buoy equity markets,” National Australia Bank economist Tapas Strickland said.
Some analysts counselled caution.
“While the market overplayed its concerns when it sank, the rise we saw afterwards cherry-picked positive factors in excess,” said Tomoichiro Kubota, a senior analyst at Matsui Securities.
“Until we see that his policies are actually this, this and this, and the contents are actually solid, it’s very dangerous to have a large position in either direction.”
Japan’s July-September economic growth figures are due Monday, while several key US indicators, including retail sales and October inflation, will be also released next week. AFP
6.29pm:A bitter season for David Jones
Eli Greenblat
David Jones, and its stablemate fashion house Country Road, have witnessed a sharp downturn in sales as volatile weather conditions and unseasonal weather patterns led to high levels of promotions and discounts to clear stock.
The upmarket department store, owned by South African retailer Woolworths Holdings, was particularly hard hit by the intense competition in the sector as its sales trajectory – which for the last few years had been close to 10 per cent growth – almost ground to a halt.
Woolworths Holdings released a trading update for the 19 weeks to November 6 on the Johannesburg Stock Exchange this afternoon.
It reported that David Jones sales increased by 2.2 per cent in Australian dollar terms. Read more.
5.58pm:Fed may hike faster than anyone thinks
Stephen Bartholomeusz
The unexpected elevation of Donald Trump to the White House comes as an inflection point for the unconventional monetary policies that have prevailed in the world’s major economies looms. His election success, and his policies, may accelerate the momentum for change.
Before the shock election outcome, the US Federal Reserve Board appeared poised to raise US official interest rates at its meeting next month for the first time in 12 months and for only the second time since the financial crisis. After its last meeting, the Fed’s Open Market Committee said the case for higher rates had “continued to strengthen.”
The market is still betting that, despite the raft of uncertainties created by the election outcome, it will press ahead with a 25 basis point increase. If Trump presses ahead with his massive infrastructure investment program and his plan to slash corporate and personal taxes, the next Fed move might be the first of a series. Read more.
5.05pm:Aussie dollar ends wild week on a soft note
The Australian dollar was weaker on Friday afternoon, caught up in this week’s maelstrom in global markets that has seen fear around a Trump Presidency morph into guarded optimism for some.
Around 4.05pm (AEDT), the Australian dollar was trading at US76.13 cents, down from US76.61c at around the same time on Thursday. It’s been a wild week for the currency, however, with it threatening to break above US78c midweek and finding an intraday low of US75.61 today.
“With Trump there is a twist - while his trade policies could be bad for productivity and global growth, his proposed tax cuts, infrastructure spending and industry deregulation will likely boost productivity and growth,” said Shane Oliver, chief economist at AMP Capital Markets.
“So it could all turn out to be positive,” he added.
Events in Washington will continue to dominate markets over coming weeks, as investors desperately seek to get greater clarity on the Trump administration’s economic policies.
“The acceptance speech of the President-elect highlighted the importance of infrastructure spending, holding out the possibility of stronger growth prospects emerging during 2017,” said Westpac in a note to traders.
Meanwhile, the Aussie dollar, a risk barometer, will continue to reflect the shifting mood in markets.
“There’s a battle royal going on in the Aussie dollar trade and the bears are winning so far,” says Greg McKenna, chief market strategist at AxiTrader.
While traders are actively picking winners under Trumponomics, or at least their expectations of how Donald Trump’s policies will translate into the economy, “it seems the Aussie dollar is at the center of this market repricing of global assets,” he added.
Still, “the uncertainty of how Trump will deal with China, specifically, is weighing on sentiment,” Mr McKenna added.
Dow Jones
4.45pm:Best week in four months
The Australian share index rose 0.8 per cent at a two-week high of 5370.7 after surging 20 points in the closing price auction.
That contributed to a 3.7 per cent rise for the week - the biggest one-week rise since four months ago, when the market was recovering from the Brexit selloff.
There’s a major rethink going on after Trump’s election win, including a reassessment of the need to keep so much cash on the sidelines.
Higher commodity prices are lifting resources, with Dalian iron ore futures up another 6 per cent in Asia.
The prospects of US deregulation and steepening yield curves are boosting financials.
And Trump’s win also removes the spectre of greater regulation in the US healthcare and energy sectors.
Next week the index should test the 100-day moving average at 5400 and the weekly downtrend line at 5440.
Breaks of those levels could clear the way for a test of the year’s high around 5600 by early January.
3.9bn shares were traded, worth $8.77bn. 562 stocks ended higher, 554 ended weaker, while 324 closed unchanged #ausbiz
— CommSec (@CommSec) November 11, 2016
4.32pm: Stocks book best week in four months
Daniel Palmer
The Australian sharemarket has rounded off a roller-coaster week with strong gains, although the steady Friday session belied extreme disparity between unloved yield plays and the swelling valuations of the big miners and banks.
It comes as traders try to guess the winners and losers of an unpredicted Donald Trump presidency.
At the close, the benchmark S&P/ASX 200 index jumped 39.5 points, or 0.74 per cent, to 5,368.3, while the broader All Ordinaries index added 37.7 points, or 0.70 per cent, to 5,446.6.
The benchmark finished up 3.6 per cent through a week that included a panic-driven sell-off on Wednesday and the market’s best day in five years on Thursday.
Driving the gains were the major names in the materials space, as the likes of Fortescue, BHP Billiton and Rio Tinto set new 52-week highs over the final two sessions. Read more.
4.10pm:Now is the time to buy NAB: Macquarie
Macquarie certainly aren’t overstating their return to positivity on NAB… but the message is clear – now is the time to buy the smallest of the big four.
With around half an hour remaining in the day NAB shares have surged 4 per cent to an intraday high of$27.75 – strongly outperforming the other big banks and the broader market, which is up around 0.3 per cent for the day.
“NAB is trading at [around] 10 per cent discount to peers (long-term average is ~6pc) and given recent underlying trends and a simplified business model, we see scope for that discount to close,” Macquarie said.
The analysts maintain their 12-month price target of $30, which represents 8.1 per cent upside from current levels.
“NAB delivered a solid and relatively clean [second-half] result, with strong organic capital generation being the key positive. We continue to believe that a convergence in credit charges and the impact of higher amortisation expenses is likely to be a drag on NAB’s fiscal 2017 earnings growth. However, we believe the market is now aware of these issues and they are largely captured in NAB’s share price.”
The market seems to agree, with today’s 4 per cent jump marking the best session for the stock since late August last year.
3.56pm:China meets target to cut excess steel
China’s economic planners said on Friday that the country’s steel industry had reached this year’s target in shutting excess production capacity by the end of October.
The coal sector will likely complete its capacity closure goal ahead of time, said Li Pumin, secretary-general of the National Development and Reform Commission, China’s top economic planning agency.
The central government has asked China’s producers to shut 45 million metric tons of crude-steel capacity and 250 million tons of coal capacity by the end of the year.
Beijing has been battling with producers, especially private ones, that are reluctant to cut capacity against backdrop of rising prices.
Dow Jones.
3.45pm:Keating weighs in on the economy
Former prime minister Paul Keating has predicted the world is headed for a “long down cycle”, in a period where the digital economy means low capital investment and job growth, writes Glenda Korporaal.
Speaking at the first annual Sohn Hearts & Minds conference in Sydney today, he said the long period of infrastructure investment in the post-war period may have been an aberration which would not return any time soon.
“We are in a post-capital phase of world development,” Mr Keating said.
“We are moving into a capital-light world.
“The question is, is the digital economy — the capital market’s sparkling creator — its undertaker?”
3.02pm:Will it be the season for retailers?
Australian retailers can expect a modest improvement in sales for the all-important festive season, with new research tipping growth of a little over 2 per cent, writes Daniel Palmer.
Annual Christmas spending forecasts from the Australian Retailers Association (ARA) and Roy Morgan Research show shoppers likely to spend more than $48.1 billion in retail stores over the period from November 15 to December 24.
The reading represents a 2.3 per cent bump on last year.
2.54pm:Tech floats look Trumped
Three technology companies scheduled to float before Christmas are re-evaluating their plans on the back of the election of Republican candidate Donald Trump as US president, writes Bridget Carter.
While the market gained ground yesterday following a fall in stocks in the previous trading session, one description of the rally was “Trump Bump”, with the sharemarket expected to remain volatile for some time until there is certainty surrounding the policies of the president-elect.
PageUp, which was to float through UBS and Credit Suisse before Christmas, now plans to head to the boards in the first quarter of next year after embarking on a non-deal roadshow.
1.48pm:Trump trading? Analysts are split on what to do next
Markets will remain in “risk-off mode” until Mr Trump’s leadership style becomes clearer, according to Credit Suisse equity strategist Hasan Tevfik, but Rio Tinto, South32 and Whitehaven Coal what he’s calling “cashflow diamonds in the dust”, Chris Kohler writes.
Meanwhile Bell Potter’s Richard Coppleson says fund managers are putting their cash piles to work in the market now that a clear election outcome had been achieved.
“The US will be the place to be and Aussie companies that are leveraged to the US will be the ones to own going forward,” Mr Coppleson said, listing James Hardie, Aristocrat Leisure, Amcor, Brambles, Incitec Pivot, Treasury Wine Estates, Macquarie and Lend Lease as his preferred options.
But equity experts are taking anything but a unified approach to trading the markets following Trump’s victory.
Deutsche Bank equity strategist Tim Baker said Australian stocks would fall another 5 per cent as uncertainty around Mr Trump’s policy plans became a headwind for investors. “Such a sell-off would take the (ASX 200 price to earnings multiple) to 14.5 times — 10 per cent below our fair value model,” he said.
And while Credit Suisse says major miners like BHP and Rio Tinto would perform well under the new US regime, Deutsche Bank took the opposing view and said risk aversion would boost the US dollar, weighing on commodity prices and resource stocks.
Read more
1.39pm:Kerr Nielson is eyeballing China’s trash and treasure
Platinum Funds Management founder Kerr Nielson has uncovered a new Chinese internet stock that called WuBa - “58” in Mandarin.
Nielson says its appeal is in the “runway’’ for second hand goods in China - a nascent market in items like cars that do big business in the developed world.
The company works on a membership basis that gives merchants the right to 50 listings - such as jobs and real estate. Nielson says another opportunity for the company is in “upselling’’ those merchants to higher priced memberships, and users lifting their visits from four a year to 12.
“We think it is a pretty interesting opportunity,” Nielson says. “What we are seeing is that dominance counts and mobility counts.”
Andrew White
1.17pm:HSBC boss positive on China trade
HSBC’s global boss Stuart Gulliver says Australia’s growth has been boosted by its close links with China including “trade openess” and initiatives for access to markets.
He also notes China’s need for Australian resources “will not end any time soon”.
“Australia has used China’s momentum to propel its own economy more effectively than any other country in the OECD,” Gulliver told the HSBC Australia-China Conference in Sydney this morning.
“Fundamentally, the story of Australia’s economic relationship with China has been written by Australia’s businesses.”
1.00pm:Time to look again at Mesoblast?
Alex Waislitz of Thorney Investment Group introduced a stock at the Sohn Hearts and Minds conference that has been on a volatile ride but one he says he is still backing - stem cell developer Mesoblast.
He said back when it had no product sales or clinical trials it was valued as a $2.5 billion company, yet today when it does have those things, its market value is $400m.
Waislitz says while he believes that the Mesoblast board and management could have done better on some issues, he remained a long term believer in the stock.
“Mesoblast is on the cusp of being an outstanding Australian success story,” he said.
Mesoblast head Silviu Itescu said the company had listened to its major shareholders and streamlined its operations to reduce the cash burden and to ensure it had a long-term cash supply.
He says the company has a list of upcoming milestones and will soon release results from a phase three trial for its lead product for graft versus host disease. Itescu’s says this product had a multi billion dollar sales potential.
Five years ago Mesoblast was trading at $8.30 and now it sits at $1.18. That said, the stock is up 7.3 per cent today.
12.37pm:Dire words from Geoff Wilson
“We are close to an adjustment or a significant correction”, Geoff Wilson of Wilson Asset Management said at today’s Hearts and Minds conference in Sydney.
“I am nervous about the high value of the market; I hope you are all holding a lot of cash,” Mr Wilson said, adding that his fund is sitting on 41 per cent cash at the moment and compared the current situation to the bull market of the 1980s.
Wislon recommends small cap company Armadale Investment Corporation as his pick (all speakers are being asked to offer a suggestion).
“It is a small cap financial services company, focussing on asset financing and management own 20 per cent.”
Glenda Korporaal
12.36pm:Transurban is the prime pick for UniSuper’s John Pearce
UniSuper chief investment officer John Pearce says his best investment idea is Transurban, the toll road operator, which he says has monopoly operations with long concessions and the ability to lift tolls in line with inflation.
It yields 5 per cent and has remuneration hurdles for management that require 9 per cent cash earnings growth. UniSuper is already the biggest holder in the stock.
Pearce says that the while infrastructure stocks have corrected over the past three months that has just improved the price of a long-term trade.
“We may be closer to the start of the yield trade than the end of it,’’ Pearce says, noting that the deleveraging cycle since the Global Financial Crisis has only gone a fraction of the time of the longest period in history - after World War One.
Andrew White
12.22pm:Macquarie sings praises for Chorus
Patrick Hodgens, Macquarie Investment Management, has tipped what he says is the yield stock with a difference - Australian-listed telco Chorus. He says he knows it’s a boring industry but says exciting investments are better than exciting industries. While he pointed out that Evolution, Qantas and Bluscope are his company’s top stocks, he says Chorus is the company’s very best idea.
“If there is only one company to own in next five years, Chorus is the one,” he says.
Chorus, he says, will have substantial cashflows of $245 per annum by 2020 and will pay a dividend then. He says the forecast is for an 11 per cent dividend yield per annum by 2020.
The company is building the fast broadband in New Zealand and Hodgens says the company is the cheapest yield stock on the market today.
Sarah-Jane Tasker
12.06pm:Growth in emerging markets, BIM
Chicago based Lizard Investors founder and chief executive Leah Zell recommends Istanbul-based low cost retailer BIM as a small-to-mid-cap investment. Founded by former executives from Aldi, it has more than 6,000 stores mainly in Turkey but is also expanding into Morocco, Egypt and Chile.
Its low cost model has given it 8 per cent of the market in Turkey, a country where retailing is very fragmented with many small and Mom and Pop sellers. The model, along with lean management, has also driven its prices up to 30 per cent below its competition.
“This success is driven by its customer value proposition and being a price leader in its market”, Zell says, predicting it will “continue to grow at double digits for many years to come.”
As the founder and biggest single shareholder with 29 per cent of the stock, she adds that the price of almost 20 times earnings could be seen to be on the high side. But she also says this is less than half its return on earnings and it has financed its expansion out of cash flow not debt.
Zell finishes strong, “This is a low cost model done right. You could double your money by 2020.”
Glenda Korporaal
11.45am:Bankers and miners keep the party going
Despite a much quieter session than yesterday the local market is heading for its first positive week in five as the ‘Trump bump’ has more-than shaken things up for investors.
At 11:15am AEDT the S&P/ASX 200 was flat at 5335.4 points, but yesterday’s session, which was the best on the ASX 200 in five years, has the index 3.3 per cent higher for the week.
The local market is steaming towards its first positive weekly finish in five.
BHP Billiton is adding to yesterday’s 8.2 per cent jump with a 2.2 per cent rise today, last trading at $24.95, while Rio Tinto gains 2.4 per cent to $59.52.
The big four banks are up between 1.2 per cent and 2.4 per cent as investors head back into the market following a decisive US election victory following a long, bruising and confusing campaign.
Santos is today’s best performer, up 7.3 per cent after the company reported former significant shareholder Hony Capital had claimed 2.25 per cent of its stock at a substantial premium.
Meanwhile gold stocks remain in the doldrums today as risk appetite returns to trading rooms – Resolute, Newcrest, Northern Star, Evolution and Regis are all down more than 4.8 per cent.
11.12am:Santos surges on handy premium
Santos shares have surged 6 per cent after the company reported former significant shareholder Hony Capital had claimed 2.25 per cent of its stock at a substantial premium.
The deal sees Hony grab control of 40 million shares at $3.98 a share, 11 per cent above where Santos traded before the transaction was made last night.
In response Santos shares jumped 5.9 per cent to $3.79 by 10.40am (AEDT).
More to come
10.50am:Blackrock likes Fairfax
Blackrock senior Australian portfolio manager Madeleine Beaumont recommends Fairfax because of its 100 per cent holding of Domain online real estate listing company.
While Beaumont says housing listing volumes are weak, in fact we are a 23-year low, “but even 30 year old kids will have to buy houses”.
She says sales at Domain have increased by an average of 33 per cent over the last three years.
“We believe trend to using mobile by well informed investors are only just beginning.”
Beaumont says it is a data rich platform for consumers, which is developing new associated businesses.
The equity manager rejects the idea that the current high level of property prices should deter people from Domain as is the volume of listings which is important, not the value of the market.
Domain is worth $2 billion in terms of discounted cash flow analysis, according to Beaumont, compared to the number one player in the market, REA, which is valued at $7 billion. She adds that Domain is overlooked because it is owned by Fairfax but the management team of Fairfax has a strong history of taking out costs.
She says the stock market is effectively valuing Fairfax print assets at negative $400 million and that the market is also ignoring the value of Stan which is a joint venture between Fairfax and Nine. The market value of Fairfax gives it no value yet it has 600,000 subscribers.
Says Fairfax has no debt and is “a great investment.”
10.58am:Trump result favours banks over resources
Trump’s policies are better for banks than resources, according to marketmatters.com.au.
It sees higher interest rates and less regulation as bullish for Banks and Financials.
But it notes that miners have already jumped on expected US inflation, and it doubts US commitment to infrastructure spending.
The firm remains bullish US banks, looking for a further 10 per cent rise in coming months.
In Australia it prefers NAB, as the cheaper bank, and Macquarie, as a beneficiary of lower US taxes, infrastructure spend and higher US earnings.
“We remain committed to our view that both global interest rates and inflation are set to rise over coming years...we remain bullish equities into at least early 2017.”
10.33am:Alinta float postponed
The biggest IPO of the year – Alinta Energy – has been officially postponed until the first quarter next calendar year because of potential volatility owing to the surprise election of Donald Trump.
The news was previously flagged as a possibility by DataRoom
10.28am:Woolies could recover in petrol sale
Macquarie analysts have upgraded their view on Woolworths on the expectation it could raise up to $2 billion from the sale of its petrol retail arm, Daniel Palmer writes.
Woolworths admitted six weeks ago it had put its petrol retail division on the block, with Caltex publically declaring an interest and BP and Vitol also believed to be keeping a close eye on proceedings.
Should the retailer receive such a lofty amount, its balance sheet will be well-positioned to support dividends and assist its push to develop momentum in the supermarket sector.
10.15am:‘Over-owned’ stocks could be in trouble
A Securities News report that China Securities Regulatory Commission ordered all futures brokers not to provide any form of margin funding may restrain commodities, resources and the Australian dollar.
The news hit around 1:30am Australian time and didn’t have much impact on commodities or resources, but coincided with a pullback in the Aussie dollar and BHP’s ADRs.
IG chief market strategist Chris Weston says it could generate some liquidation of “over-owned” resources stocks.
“We are watching the underlying commodities for any sign of reversal,” he says. “This may be a short-term AUD negative, so watch bulks for a reversal.”
Still, BHP ADR’s point to a 3 per cent rise to $25.14 after overnight gains in commodities and
the iron ore spot price rose 4.5 per cent to a two-year high of $74.20, up 23 of the past 24 days. LME copper jumped 3.5 per cent, up 14 days in a row and coking coal rose 3.9 per cent to $US295 a tonne.
“Coking coal and steel futures have dropped a touch, but while I am not one to advocate shorting any commodity that is in such a powerful uptrend, I would be cautious here as all of these mentioned commodities are grossly overbought,” IG’s Weston says.
“Equity traders would also be wise to watch price action in steel futures, especially as the leading light for iron ore and other metals. The gains in this space have been pretty crazy as well.”
10.08am:The unconscious bull market
“I read to see thought processes,” Howard Marks of Oaktree Capital said at this morning’s Hearts and Minds conference in Sydney.
“I don’t what to read people say you should buy and sell. I have learned a lot by studying how people think.”
He says he follows Warren Buffett and Jeremy Grantham of GMO in Boston, among others.
Marks says there are three stages of a bull market… In the first stage asset prices are low and the last stage asset prices are very high and there is unlimited optimism.
“Even though people are not thinking bullish, they are acting bullish.”
“In American terms we are in the seventh innings, if not the eighth.”
Glenda Korporaal
10.00am:Leaders back Hearts and Minds conference
Gary Weiss of Ariadne Australia says today’s conference at Sydney’s Opera House arose from his recent visit to the same conference in New York City, which he says is a must-attend event for anyone seriously interested in investment. Weiss says the conference has consistently attracted some of best global investors as speakers and has spread onto the world stage.
Meanwhile, as Glenda Korporaal reports, CBA’s Ian Narev is also a fan of today’s conference.
“The best idea you will come across today is the idea of the conference itself,” the CEO of Australia’s biggest company said.
“It shows how business and medical research can work together. It is great that we are able to come here to have a stimulating way to help medical research.
“Today is an outstanding is an example of the thinking of how business and medical research can work together.”
Sarah-Jane Tasker
9.44am:ASX to catch its breath after best gain in five years
Australian stocks look set to catch their breath today after staging the biggest one-day gain in five years yesterday as investors dove back into the market following a decisive result to the US election.
The SPI 200 is pointing to a slight fall at the open but fair value suggests a 0.3 per cent rise is more likely.
The S&P/ASX 200 shot up 3.3 per cent on Thursday to 5328.8 points and currently sits 2.9 per cent in the black over the four days so far this week.
All eyes remain on major miners as another huge rise in the iron ore price sees billions added to the value of the market giants.
The price of iron ore delivered to the port of Qingdao surged 4.4 per cent overnight to $74.12, which is its highest level since November 2014. The commodity has now rocketed 14 per cent in four sessions.
Elsewhere, the price of oil slipped overnight, with WTI dropping 2.1 per cent to $US44.35 and Brent losing 1.6 per cent to $45.64.
BHP will take centre stage again today after shares in the world’s biggest miner rose 8.2 per cent yesterday after an initial gain of 9.8 per cent. The company’s ADRs are pointing to a 3 per cent rise today.
Fortescue Metals is another one to watch – the pure-play iron ore miner is up 13.6 per cent for the week to $6.01 after gaining 10.7 per cent yesterday.
9.41am:Broker ratings changes
Fortescue Metals raised to Neutral vs Underperform - Credit Suisse
Westfield raised to Buy vs Neutral - UBS
Bluescope raised to Buy vs Neutral - UBS
NAB raised to Outperform vs Neutral - Macquarie
Woolworths raised to raised to Neutral vs Underperform - Macquarie
South 32 raised to Buy vs Neutral - Jefferies
9.39am:Howard Marks of Oaktree Capital
Oaktree founder Howard Marks says Trump’s election could be favourable for business but he is in the “I don’t know” camp about what it will mean for markets in the long term. Promises to cut taxes and regulation will be a positive but the protectionist trade policies won’t.
“The jury is far from out, it’s barely in,’’ Marks says to Manikay Partners’ Shane Finemore.
“He has a slim margin in the senate, it includes people who said wouldn’t support him, and I don’t think it will be a rubber stamp.
“On paper should be pro-business president, more than Hilary Clinton would’ve been.
“He said lots of things a lot of people didn’t like, said supportive things for business, cut taxes, pro infrastructure spend, if implement things he has said he would implement, would be positive for business.
“His appointments will be important. We’ll see what kind of people he can attract to work in his administration and see what he tries to move forward. “
Promises to spend on infrastructure were made by both sides and are likely to get support in congress. But he says it won’t be enough to change he trajectory of the US economy.
On how the election was decided, Marks says Trump’s campaign tapped deep emotions in the US.
He didn’t make people angry, it touched on an anger, it touched on a division ... people are angry.
“The economy has been growing more slowly in last eight years, think it will continue to grow more slowly than it used to ... will have social issues to deal with and government will have to do a good job.”
Andrew White, live at the Sohn Hearts and Minds Conference
9.22am:Mike Baird Addresses Sohn Conference
NSW Premier Mike Baird has pitched the ‘deal of the century’ in terms of investment in New South Wales at Sohn Hearts and Minds Conference. He thanks for investing in the great state of NSW as he makes humorous presentation. “Come and fill your boots.” he says to possible investors. Mike Baird says Sohn conference is the new type of thinking in philanthropy.
Glenda Korporaal, live at the Sohn Hearts and Minds Conference
9.20am: Sohn Hearts and Minds Conference begins
Welcome to the Sohn Hearts and Minds conference. Its a full house of 500 people down at the Opera House this morning with the creme of the active funds management industry from Australia and abroad. Its a charity fund raiser for medical research and there is already $3m on the table from sponsors and attendees. Big namers like Howard Marks from Oaktree and Kerr Nielson from Platinum will be offering up their best investment idea in an 8 minute pitch to the audience who can then back that idea.
Mike Baird, the former banker and NSW Premier opens with a light hearted pitch on the NSW economy, noting an expected $100bn growth in value projected out to 2020. But he notes there is a caveat over the “parent company” - a sly dig at the Federal Government. “Fill your boots’’, he says to applause and laughter.
Andrew White, live at the Sohn Hearts and Minds Conference
9.10am: Trump election could drive gold but drain oil
Elizabeth Redman
The election of Donald Trump could boost the gold price 14 per cent and push OPEC members to conclude a deal to cut oil production, Credit Suisse analysts said.
Although the Trump administration looks positive for parts of the US oil and gas industry, it could also heighten geopolitical risk, according to the bank.
“It is safe to say that Mr Trump did not project himself as a genial mediator and a strategic visionary keen to engage and help resolve conflicts around the world,” Credit Suisse said in a research note.
“Indeed, oil markets project heightened disruption risk and slower volume growth from the sovereign producers involved in conflicts in around North Africa and the Mideast. Specifically, aside from the new risk of a rupture with Iran; further disengagement with Saudi Arabia; more confronting of ISIS militarily and a further distancing from NATO ally Turkey. And that is just the Mideast.
“As for OPEC, perhaps this indeed means that members now sense a greater urgency to agree on a supply cut later this month.”
On gold, Credit Suisse said Mr Trump’s policies of tax cuts and increased fiscal spending are inflationary, which could put pressure on real rates, which are inversely correlated to gold.
In addition, Mr Trump’s plan to repatriate jobs that have moved overseas calls for a weaker US dollar, which is a positive for gold, the bank said.
Credit Suisse’s base case is for gold to rise to $US1,438 per ounce in 2017 on average, from around $US1,259 today.
8.40am:Markets embrace Trump vision
Global share markets roared back to life while government bond markets were heavily sold off as investors embraced US President Donald Trump’s vision to reinvigorate the world’s biggest economy, Markets Editor David Rogers writes today.
But analysts warned of significant risks to the outlook for growth in the Asian region that could add to the case for further interest rate cuts in Australia next year.
Australia’s benchmark S&P/ASX 200 share index surged 3.3 per cent to 5328.8 points — its biggest one-day rise in five years — amid massive gains in the technology, materials, healthcare, financials and energy sectors — adding close to $50 billion in market capitalisation.
The S&P/ASX 200 fell as much as 4.9 per cent to a four-month low of 5052.1 a day earlier as Trump’s shock US election victory became clear. At its low, the share index was 10 per cent below its August peak.
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7.50am:Peek into Waislitz’s empire
Investors have been given a fresh look inside the small caps investment empire of Melbourne billionaire Alex Waislitz as part of the documentation for the listing of his new technology company Thorney Technologies, writes Damon Kitney.
7.00am:ASX to open lower as rally falters
Australian stocks look set to open slightly in the red as rallies on international markets lose steam, as investors ponder what a Trump presidency may mean for the US and global economies.
At 6.45am (AEDT), the share price index was down eight points at 5,332.
The predicted local fall comes despite the Dow Jones hitting a new intraday high in afternoon trade. European stocks fell.
The Nasdaq fell sharply in midmorning trade, with Amazon, Facebook and other large tech stocks tumbling on worries about policy changes and protectionism under the Trump administration.
In Australia, the market yesterday followed its global counterparts, putting on a spectacular turnaround as the dust settled following Republican Donald Trump’s victory in the race for the White House.
The benchmark S & P/ASX200 index rose 172.2 points, or 3.34 per cent, to 5,328.8 points.
The broader All Ordinaries index gained 170.6 points, or 3.26 per cent, to 5,408.9 points.
AAP
6.58am:Iron ore shoots to two-year high
The iron ore price has surged to its highest point in two years, but traders are wondering how much longer the gains can last, Elizabeth Redman writes.
Iron ore added 4.5 per cent to $US74.20 a tonne overnight, according to The Steel Index, from $US71 yesterday. The winning run now extends to a stretch of 24 sessions with only one fall.
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6.55am:Dollar slides
The Australian dollar has slipped against its US counterpart and the euro but has risen against the yen.
At 6.35am (AEDT), the local unit was trading at US76.20 cents, down from US76.74 cents yesterday.
The local currency lost ground against the US dollar as the greenback continued to strength, on track for a fourth straight day of gains, as markets reassessed what a Trump presidency may mean for the economy.
AAP
6.50am:Oil drops on record output
Oil prices fell Thursday after the International Energy Agency reported record production from Organization of the Petroleum Exporting Countries members and subdued expectations for demand growth.
Dow Jones
6.45am:Fed’s Bullard eyes Dec hike
Federal Reserve Bank of St. Louis President James Bullard says he remains on board with raising rates next month and explained it will take some time to understand the economic implications of the unexpected election of Donald Trump to be president.
“Our view has called for a single rate increase. I think December would be a reasonable time to implement that increase,” Mr Bullard told reporters after a speech in St. Louis.
Dow Jones
6.40am:Wall St reaches fresh high
The Dow Jones Industrial Average hit a new intraday high and bond prices continued falling, as investors bet that a Donald Trump presidency could mean more fiscal stimulus, lower corporate taxes and higher inflation.
But European stocks fell as investors sold off dividend-paying stocks that appeared less attractive after a rise in US bond yields.
Dow Jones
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