ASX claws back after $78bn sell-off

The local market fought to regain ground on Thursday, after a two-day sell-off wiped $78bn from the boards earlier this week.

The local market fought to regain ground on Thursday, after a two-day sell-off wiped $78bn from the boards earlier this week.

The local market fought to regain ground on Thursday, after a two-day sell-off wiped $78bn from the boards earlier this week.

Suggestions that the US and China could still reach a deal spurred a recovery in the US overnight, and boosted the S&P/ASX 200 from the open.

Shares jumped to as much as 6684.6 early, and settled to a gain of 77 points, or 1.16 per cent, at the close to 6683.

Meanwhile, the All Ords edged up by 77 points, or 1.15 per cent, to 6791.3.

Locally, data on retail sales added to signs that consumers were saving, rather than spending, and that more stimulus was on the agenda for the RBA.

“We characterised yesterday’s Q3 GDP report as one where the consumer was missing in action, and the story appears to be continuing through to early Q4 indicators,” RBC macro rates strategist Robert Thompson said.

“Downside risks are already building given the current run of indicators: today’s flat October retail sales adds to motor vehicle sales data which revealed further falls in November, building on a 1.3 per cent drop in October.

“There’s still no real evidence of a consumption boost from triple rate cuts and higher tax refunds. Consumers are saving, not spending, the extra income in the face of a slowing labour market and lacklustre wage growth.”

Adding to the disappointment, October’s trade balance also fell short of expectations, showing a surplus of just $4.5bn against $6.5bn expected.

Those data points pressured the Aussie dollar in Thursday’s trade, sending it as much as 20 points lower on the initial release, before recovering somewhat to a slip of 0.15 per cent to US68.39c at the local close.

To equities, and banks got a boost this morning after the New Zealand Reserve Bank’s capital requirement changes were more mild than anticipated.

The bank lifted its capital requirements for the big banks to 16 per cent, as previously foreshadowed, but extended the transition period in a move some analysts described as a “watered down review”.

ANZ, the bank with the most New Zealand exposure, jumped by 2.1 per cent to $24.70 after an initial halt in its trade in the morning.

Meanwhile, Commonwealth Bank lifted by 1 per cent to $76.62, NAB gained 2 per cent to $25.41 and Westpac put on $1.2 per cents to $24.33.

Energy stocks got a boost from a 4 per cent jump in oil prices. Santos lifted by 4.23 per cent to $8.14, Oil Search gained by 1.4 per cent to $7.10 and Woodside put on 1.9 per cent to $33.57.

Whitehaven warned investors it was facing a skills shortage at its Maules Creek operations, and that stoppages due to drought would dent its first half production. The stock was one of the worst performers on the market, finishing down 10 per cent to $2.69.

In the major miners, BHP put on 1.6 per cent to $37.41, Rio Tinto rose by 0.8 per cent to $95.79 and Fortescue lifted by 2.3 per cent to $9.97.

In other news, Afterpay jumped by 2.3 per cent to $29.75 after boasting $1bn in sales over the past month thanks to activity over the Black Friday sales period.

Peer Zip Co added 3.1 per cent to $3.66, while Splitit slipped back by 0.7 per cent to 76c and FlexiGroup gained 1 per cent to $1.99.

Metcash shares came under further pressure, after revealing the extend of the damage from the cancellation of its key 7-Eleven contract. The company posted a $151.6m first-half loss and finished the session down 0.4 per cent to $2.76.

In other supermarket news, Coles was will pay $5.25m to dairy farmers for not passing on proceeds of a price increase on its fresh milk. Shares in the company added 0.9 per cent to $15.35 while rival Woolworths added 0.8 per cent to $38.02.

Magellan’s monthly funds under management update helped to deliver a 3.6 per cent boost to shares, the stock finishing at $50.87 as the fund nears $100bn under management.

Bellamy’s investors voted in favour of the company’s $1.5bn takeover by China Mengniu Dairy. Shares closed near the $13.25 per share offer price, up 0.61 per cent at $13.22.