Stocks surge to near 12-year high after poll upset as banks soar
The ASX hit near 12-years highs as banks powered a $33bn post-election bonanza.
Thanks for joining us today. The local bourse has posted one of its largest ever post-election gains and the best one day lift of 2019 following the Coalition’s victory on the weekend. Big gains for the banks lifted the overall market, but other stocks joined in the election rally.
The Australian dollar has also jumped to above US69c.
In other corporate news, short-seller target Blue Sky entered receivership, while Incitec Pivot and Elders booked interim results and Lynas inked an MOU to develop a rare earths facility in the US.
We look forward to seeing you again tomorrow.
-
5.27pm: Bank gains power ScoMo rally
The Australian sharemarket has roared higher, posting its best day in 15 weeks following the Coalition’s surprise federal election victory. The benchmark S&P/ASX200 index was up 110.8 points, or 1.74 per cent, to 6,476.1 points on Monday, while the broader All Ordinaries was up 104.5 points, or 1.62 per cent, to 6,564.7.
It was the fourth straight day of gains for the ASX200, and the best day since February 5, hitting a level it hadn’t seen since November 2007. “A very big day, a very strong day, a lot of money flowed through the markets,” said CommSec market analyst Steven Daghlian.
Banking stocks in particular were resurgent, collectively soaring 5.85 per cent, with the four heavyweights posting gains of between 6 and 9 per cent. Together those four stocks accounted for more than 80 per cent of the ASX200’s gains.
“It’s not often we see blue chip stocks gaining 9 per cent in a single day,” CMC Markets chief market strategist MichaelMcCarthy said.
And yet Westpac was up 9.2 per cent to $27.75, while NAB gained 7.9 per cent to $25.81, ANZ was up 7.8 per cent to $27.86and Commonwealth Bank gained 6.3 per cent to $77.40.
Medical insurers also enjoyed some of the day’s strongest gains, with NIB soaring 15.79 per cent to $6.82 and Medibank up11.5 per cent to $3.21 as it became clear Labor’s plan to limit premium increases to 2 per cent a year wouldn’t be taking effect.
“It’s clear the opposition’s proposed cap on medical insurance premiums were weighing on them,” Mr McCarthy said.
Private healthcare operator Ramsay Healthcare, which could also have been hit by the limits on premium increases, gained 7.3per cent to $69.58. Retail stocks also surged, with homewares company Adairs up 5.74 per cent to $1.75, Woolworths up 1.87per cent to $34.82 and JB Hi-Fi up 5.24 per cent to $26.92.
Automotive dealership company AP Eagers gained 5.6 per cent to $8.90 while possible merger partner Automotive Holdings Group surged 9 per cent to $2.55. Yancoal, which could have been hurt by Labor’s stricter environmental policies, gained 5.2 percent to $3.47, while Whitehaven Coal was up 1.42 per cent to $4.30.
Companies that do not typically pay franked dividends - such as airports and real estate trusts - were lower.
Mr McCarthy said investors had likely moved into such companies in the expectation that Labor would scrap franking credits, and were now moving out of them.
Property trust Dexus was down 0.7 per cent to $12.95, Goodman Group was down one per cent to $13.58 and Sydney Airport was down 3.96 per cent to $7.51. With negative gearing apparently here to stay, companies exposed to the property market also gained.
Developer Stockland Group surged 4.8 per cent to $4.12, building material company Boral gained 4.7 per cent to $4.91 and Realestate.com.au operator REA Group was up 4.1 per cent to $91.35.
But childcare provider G8 Education was down 2.7 per cent to $2.88 as investors realised Labor wouldn’t be in power to fulfil its promise to increase childcare subsidies.
Tech stocks were also down, collectively 1.43 per cent, as investors switched out of the sector.
Not everything was about the election. Fortescue Metals gained three per cent to $9.22 after the price of iron ore rose 2.4 per cent to break the $US100 a tonne level for the first time in five years.
The Aussie dollar had a more muted reaction, buying 69.26 US cents, up from 68.89 US cents on Friday.
Mr Daghlian said currency traders would be watching the Reserve Bank’s release of minutes on Tuesday, as well as a speech by RBA Governor Philip Lowe set for 1.10pm, for hints on whether an expected interest rate cut was likely soon.
AAP
4.20pm: Poll fuels solid gains
Australia’s S&P/ASX 200 share index has closed up 110.8 points, or 1.7 per cent, at an almost 12-year high of 6376.1 points after the unexpected Coalition victory in the federal election.
This is the strongest one-day rise in the Australian sharemarket since a 1.9 per cent rise on December 27, when it was began to recover from a 15 per cent fall since late August.
It’s also the best one-day post-election rise since Kevin Rudd was elected in 2007 and the second-biggest rise since a 2.6 per cent jump after Bob Hawke came to power in 1983.
The rise was primarily driven by high-single digit percentage gains in the major banks amid a perceived lessening of regulatory risk under the Coalition government.
Other standouts included health insurers, as investors saw less risk of margin compression under the Coalition, and housing and consumer-related stocks.
Expensive industrials, technology and utilities stocks came under pressure however as investors took profit to rotate into sectors that could benefit from a Coalition government.
Richard Ferguson 4.16pm: Albo rethinking franking
Labor frontbencher Anthony Albanese has opened the door to dumping the party’s franking credits reforms if he is elected leader, saying the policy hit people who “weren’t very wealthy”.
“Quite clearly one of the issues I think that was very difficult for us was that the measures that we were proposing about the dividend issue impacted on people’s hip pockets, and some of those, of course, weren’t very wealthy people,” he told Adelaide’s 5AA radio.
“They were people for whom a small cheque was what they paid their rates with or their car rego, or other essentials in life when it came in, so that clearly had an impact for us.
“Quite clearly the amount of money that is going out there is the reason why we were proposing that $6 billion is unaffordable in terms of the budget to keep growing into the future, but clearly those issues are going to have to be looked at by the government itself in my view, down the track.”
Mr Albanese was reported yesterday to be considering dumping both the franking credits and the negative gearing policies, but he would not confirm that when asked at his campaign launch yesterday in Sydney.
4.07pm: Cat’s new property play
Antony Catalano has invested in a new property technology business, less than three weeks after the former Domain boss joined forces with billionaire investor Alex Waislitz to buy Nine Entertainment’s regional newspapers.
Mr Catalano will also chair the company, The Today Business, which will provide media planning, marketing and management services to the real estate industry.
Co-managing director Travis Day said the business “combines decades of media and property experience with our proprietary technology to take full advantage of today’s marketplace.”
Mr Day will manage the new business with former Domain Media director Simon Kent.
Other founding members include, former Domain executive Trent Casson, who will lead the residential arm of the new business, Barrie Bowles, who will head its digital strategy, and Paul Giorgilli, the group’s chief technology officer.
3.58pm: Biggest Coalition boost since Fraser
It’s looking like the all ordinaries, which is an older index than the ASX200, is on track for its biggest boost after a Coalition win since 1980.
After Malcolm Fraser’s Liberals and Natioanls defeated a Bill Hayden-led Labor in October 1980, the All Ords jumped 6.9 per cent on 20 October, the day trading resumed.
Mackenzie Scott 3.46pm: Simonds get licence repreive
Queensland’s construction commission has overturned its decision to suspend the building licence of home developer Simonds Group following a company restructure to meet financial requirements.
Melbourne-based Simonds Group will no longer report to the Queensland Building and Construction Commission as a consolidated group, instead restructuring under a standalone entity called Simonds Queensland Constructions. Several debts and liabilities were also paid off.
As a result, the company now meets the minimum required financial status to operate in the state.
3.41pm: Franking hurt Labor: Millner
The unexpected Coalition win in the federal election is good news for business and consumer confidence, according to Contact Asset Management portfolio manager Tom Millner.
“We really do think the Labor attack on franking credits and other taxes on hard working individuals and families who were seen to be ‘rich’ impacted the result of this election,” he says.
“This result has made it very clear that Australians just want to be rewarded for working hard, and the results in Queensland in particular was a clear indication that the mining community is still very strong.”
In his view the strongly-positive sharemarket reaction shows that retail investors “had a serious issue with Labor stealing their franking credits”.
“The good news is the market can push forward and businesses can have confidence that there is some stability so they can again reinvest for growth,” Mr Millner tells The Australian.
“There is still a lot to do as an economy, but longer term, consumer confidence should return which will also have a positive effect on the retail and housing sectors.”
3.28pm: ‘End the anti-business rhetoric’: BCA
The Business Council of Australia says it looks forward to working with the re-elected Coalition government to grow the economy.
“We need to continue to do everything we can to restore business confidence so employers can get on with the job of delivering higher wages and new jobs across Australia, particularly in our regions,” Business Council chief executive Jennifer Westacott said in a statement.
“We support efforts that continue to drive Australia’s competitiveness and attract much needed investment.
“Australians want sensible solutions to increase wages, drive down energy prices, deal with climate change, and give them the skills they need.
“Now is the time to end the anti-business rhetoric and do all we can to ensure that all Australians, particularly those in the regions, have the opportunity to get ahead.”
3.26pm: Best post-election lift in 36 years
The Australian sharemarket is enjoying its biggest post-election jump since 2007.
The benchmark S&P/ASX 200 has surged 1.7pc to near 12-year high of 6475.5 after the surprise Coalition victory, amid strong gains in banks, health insurers, consumer stocks and housing-related stocks.
Based on the All Ordinaries index, which predates the ASX 200, it’s heading for its best one-day post-election rise since Kevin Rudd won the November 2007 election. That makes it the second biggest rise since Bob Hawke won the March 1983 election, pushing the then benchmark share index up 2.6 per cent.
It’s also the third-biggest rise in the Australian sharemarket since the October 1980 election, when the All Ords surged by 6.9 per cent.
The average one-day post election reaction since 1980 been a rise of 0.8 per cent.
S&P/ASX 200 last up 1.7pc at 6470.
02.30pm: Stay underweight banks - Ord Minnett
Ord Minnett tells clients to stay underweight Australian banks for now, even after a 6-8 per cent rise in the four majors following the unexpected Coalition victory in the federal election.
“We remain underweight the sector at this point in time, but there is a risk that a sustained turn in sentiment could trigger a shift in positioning among domestic long-only funds, which would be exert considerable buying pressure,” the broker said.
While there’s obviously been a major push back into the banks today, short positioning in the majors as of last week was only slightly above three-year averages as of last Friday.
Westpac and NAB shares had the highest proportion of shorts versus their averages, which may partly explain why they are seeing the biggest gains.
Ord Minnett says the banks “have undoubtedly been carrying some discount in anticipation of a more hostile political atmosphere.”
And while it doubts they’re in for an easy ride, the broker says they will now escape a more draconian implementation of the final recommendations from the Royal Commission.
“In addition, negative gearing and capital gains discounts remaining in place should be supportive of an already improving trend in housing sentiment.”
1.50pm: Former China market regulator probed
China’s former top securities regulator -- appointed to clean up markets following a 2015 market meltdown -- is under investigation for unspecified wrongdoing, authorities said late Sunday.
Liu Shiyu was suspected of “violating the law”, said a brief notice on the website of the Communist Party agency responsible for policing corruption.
He had turned himself in, the notice said, but gave no further information. A former banker and deputy governor with the central bank, Liu was installed as head of the China Securities Regulatory Commission (CSRC) in early 2016, with a mission to restore confidence in financial markets.
The previous year, China’s traditionally volatile markets slumped precipitously in a disastrous meltdown worsened by an erratic response from regulators.
Liu declared war on financial “crocodiles” and “barbarians” who manipulate the market.
He launched a crackdown that saw dramatically enhanced enforcement of securities regulations and sharply increased the amount of fines levied.
He was replaced in January by Yi Huiman, former chairman of the giant Industrial and Commercial Bank of China.
Liu is not the first financial regulator felled in a crackdown on corruption by President Xi Jinping’s government.
Yao Gang, the former vice chairman of the CSRC, was last year sentenced to 18 years in jail for taking bribes and insider trading.
Xiang Junbo, China’s former insurance regulator, also pleaded guilty to taking bribes last year.
AFP
1.45pm: Murray Cod hooks Blumenthal
Celebrity chef Heston Blumenthal is set to become a stakeholder in NSW-based inland aquaculture enterprise Murray Cod Australia.
Murray Cod (MCA) announced on Monday a company associated with the Michelin-starred Blumenthal and his Fat Duck group will become a shareholder through the issue of 1.5 million fully paid ordinary shares.
The value of the deal was not given, although Murray Cod Australia’s ASX-listed shares were worth 15.5 cents before trade on Monday — more than double their 6.1 cent of a year ago.
Mr Blumenthal has separately signed a five-year deal to be an advocate for Murray Cod’s pond-grown Aquna Sustainable Murray Cod on social media and at industry events.
“He will also provide assistance and advice with menu and product development,” Murray Co
d said in a release to the ASX.
AAP - read more
Perry Williams 1.21pm: AGL urged to revisit supply deal
AGL Energy faces pressure to renegotiate its largest single electricity contract with the Tomago Aluminium plant in NSW which is struggling to turn a profit at current spot aluminium prices, Credit Suisse says.
Tomago, the biggest user of energy in Australia, has seen its power costs increase by $290m since November 2017, partly due to a clause which means the manufacturer foots the bill for increased coal costs.
Profitability at the Hunter Valley unit has halved in the last few years despite aluminium prices increasing 20 per cent since 2017, the broker estimates.
“Such a decline in profitability warrants a response, and with efficiency opportunities limited, this leaves external assistance from AGL and the government,” Credit Suisse told clients.
AGL struck a supply agreement in 2017 that helped keep Alcoa’s Portland smelter in Victoria open until 2021, showing it may be willing to strike a compromise.
“It is conceivable that AGL could offer $5 per megawatt in price relief while remaining value neutral, equivalent to $42m per annum for Tomago. We emphasise that for AGL, such an amendment would in theory be value neutral.”
Tomago is owned by Rio Tinto, CSR and Hydro Aluminium.
AGL’s target price trimmed by Credit Suisse to $18.10 from $18.30 and underperform retained. AGL shares are down 1.1 per cent to $22.20.
1.07pm: Asian markets lift
Most Asian markets rose Monday after Donald Trump showed signs of conciliation in his trade wars but investors remain on edge over the China-US standoff with some concerns that talks between the two have stalled.
Japanese dealers were cheered by forecast-beating economic growth data.
However, the pound is wallowing around four-month lows on growing fears Britain will leave the European Union without a divorce deal.
Global markets have been in turmoil for two weeks since Trump threatened -- and later delivered -- a hike in tariffs on Chinese imports, to which Beijing retaliated and relit their debilitating trade battle.
The move also threw a spanner in the works for long-running negotiations between the economic superpowers that were thought to have been close to conclusion.
That was compounded by Trump’s decision to bar Chinese telecoms firms from the US market and added Huawei to a blacklist restricting US sales to the firm.
But there was a sliver of hope after Trump on Friday removed steel tariffs on Canada and Mexico and announced a six-month delay in imposing steep tariffs on auto imports as he seeks talks with Japan and the EU on the issue.
Most equity markets were in positive territory, with Tokyo ending the morning 0.3 per cent higher, with traders taking heart from news that the Japanese economy expanded more than expected in the first quarter and improved slightly from the previous three months.
Seoul gained 0.6 per cent, Wellington added 0.3 per cent and Taipei was 0.4 perc ent higher.
However, Hong Kong shed 0.6 per cent and Shanghai was off 0.8 per cent, with Jakarta and Manila also down.
Reuters
1.05pm: Incat inks huge tinnie deal
Tasmania shipbuilder Incat has signed a contract to build the world’s largest aluminum ship, an order worth about $US130 million ($A188m) that will keep hundreds of workers busy for years.
Incat will build the 130-metre ferry for longstanding Latin American customer Buquebus to operate between Argentina and Uruguay.
Incat founder and chairman Robert Clifford told AAP the privately held company will spend six months designing the vessel, with delivery expected in three years.
The vessel will likely weigh 13,000 tonnes and be 32m wide, carrying 2,100 passengers and 220 cars on two routes from Buenos Aires lasting 75 minutes and three hours.
The ship will be the largest aluminium vessel ever made by tonnage, by length and “certainly” by width, he said.
The ferry will also feature the world’s largest duty-free shop on a ship, with over 3000 square metres of retail floor space, similar to the size of large airport duty-free shop.
Aluminium is gaining favour as a ship-building material as aluminium ships are half the weight of steel ships, so use less fuel, Mr Clifford said. “Everyone’s getting very environmentally friendly and power conscious,” he said. Aluminium ships also retain their strength better as they don’t rust, he added. The ferry’s four engines will burn eco-friendly LNG, and are forecast to propel the vessel faster than over 40 knots.
Between 600 to 700 workers will be employed on the project, Mr Clifford said. With five other ships on order and more large vessel orders expected, Incat is looking to hire about 100 workers a year to handle the production, he said. The ferry will the ninth ship Incat has built for Buquebus.
AAP
Sarah-Jane Tasker 1.02pm: Health insurers soar
The market value of Australia’s health insurers is climbing on the local market with the removal of the threat of Labor policies that would have negatively impacted the sector.
Outgoing Labor leader Bill Shorten had put ambitious health policies at the centre of his campaign, including a promise to cap annual health insurance premiums at two per cent for two years to address affordability concerns.
Health insurers and private hospitals were preparing for a Labor win and modelled their businesses on the expectation of a two per cent policy. Analysts had also widely factored in the Labor threat into forward estimates on the companies, with the surprise election result now boosting outlooks.
Shares in Australia’s largest private insurer, Medibank (MPL), are 10.7 per cent higher at $3.19, while Nib (NHF) is up 11.8 per cent at $6.58. Private hospital group Ramsay Health Care (RHC) is 6.7 per cent higher at $69.20.
JP Morgan’s analysts bumped their price target on Medibank from $2.30 to $3.05 on the back of the Coalition’s election win.
Paul Garvey 12.52pm: More light on Lynas’ US plans
Takeover target Lynas Corp has flagged plans to establish a new rare earths processing plant in the United States, a move that would take it closer to one of the biggest and most strategic rare earths customers.
Lynas (LYC), which has rebuffed a $1.5 billion, $2.25 per share proposal from Wesfarmers, announced on Monday that it had signed a memorandum of understanding with Texas-based Blue Line Corp to develop a rare earths separation plant in the United States.
Lynas has previously flagged its potential to move further downstream in the US into higher-value products.
The proposed US plant would allow Lynas to separate out key individual materials from the heavy rare earths product currently produced out of its Malaysia plant. Lynas is hosting an investor day on Tuesday and will likely shed more details on the plan then.
John Durie 12.50pm: Bank spike a flash in the pan
It seems the status quo is a powerful driver for stock prices, as shown today by the surge in bank and health fund shares.
But the impact will be short lived.
The bank price increases are based on the fact that banks are big dividend payers and the ALP defeat means there will be no changes to the treatment of franked dividends.
The increases in Medibank, Ramsay and NIB shares are due to the fact that now the Coalition has won, there will not be limits on health fund premium increases, as Labor had pledged.
All of the above are short term moves, because stocks tend to trade long term on fundamentals, not on short term sentiment swings.
12.48pm: Housing risk “materially reduced”
The federal election outcome has “materially reduced” downside risk for the Australian housing market, according to UBS chief economist George Tharenou.
“The main implication of the election is the absence of expected Labor changes, especially to negative gearing, capital gains tax and franking, rather than the Coalition’s mostly ‘status quo’,” Mr Tharenou says.
“While this likely has limited impact on our credit tightening thesis, it may stabilise sentiment, and hence materially reduces downside risk to the UBS outlook for housing and the negative wealth effect on the consumer and economy.”
He notes that household tax cuts, due to start in July, are only modest at less than 0.5 per cent of GDP.
Mr Tharenou is planning to review his forecasts as the election results are finalised and any new Government policies are released.
12.41pm: New Hope jumps on poll result
Coal miners are performing strongly on the sharemarket after the federal election.
The unexpected Coalition victory is great news for coal miners to the extent that it gives the government a mandate to push for new coal fired power stations.
New Hope (NHC) shares have risen 4.4pc to a three-week high of $2.86, on track for its fourth-biggest single-day rise this year.
Metallurgical and thermal coal miner, Whitehaven Coal (WHC), is up 0.6pc after rising 2.7pc to a 4-week of of $4.36
12.32pm: ASX hovers at decade high
Banking stocks have surged as investors reacted to the Coalition’s federal election win, driving the Australian share market to a near 12-year high. The benchmark S&P/ASX200 index was up 90.2 points, or 1.42 per cent, to 6,455.5 points at noon on Monday, while the broader All Ordinaries was up 85.3 points, or 1.32 per cent, to 6,545.5.
ANZ was up 6.83 per cent at $27.615, Commonwealth Bank was up 5.59 per cent to $76.90, NAB was up 6.90 per cent to $25.57, and Westpac was up 7.30 per cent to $27.265.
The heavyweight financials — up about five per cent as a whole — and consumer- related stocks were in positive territory along with the telecoms and property trusts sectors.
Industrial shares had the heaviest losses, collectively down 0.97 per cent, while the materials sector dipped 0.28 per cent.
Mining giant BHP was down 0.81 per cent to $38.15, while Rio Tinto was up 0.92 per cent to $102.285 after iron ore rose above $US100 a tonne for the first time in five years at the end of last week.
Medibank jumped 11.46 per cent to $3.21 as investors appeared relieved that a Labor policy to cap annual premium increases was no longer on the horizon. Elders was down 0.23 per cent to $6.565 after the diversified agriculture firm’s first-half profit fell 34 per cent due to hot and dry weather across Australia. Murray Cod Australia jumped 6.45 per cent to 16.5 cents after the inland aquaculture enterprise announced that celebrity chef Heston Blumenthal would become one of its stakeholders.
Incitec Pivot was down 2.55 per cent to $3.245 after the chemicals and fertiliser manufacturer’s first-half profit fell by more than two thirds following the north Queensland floods.
Scentre was up 0.26 per cent to $3.85 after the property group sold a 50 per cent stake in Sydney’s Westfield Burwood shopping centre.
The Aussie dollar is buying US69.13c, from US68.89c on Friday.
AAP
David Rogers 12.15pm: RBA to still cut rates
The unexpected Coalition election victory doesn’t derail the case for RBA interest rate cuts, according to RBC’s head of ANZ fixed-income and currency strategy, Su-Lin Ong.
While expecting a bounce in business confidence in the next couple of surveys, she notes that whether a likely bounce is sustained will, in part, depend on global developments and the broader economic trajectory.
She also says the return of a Coalition government “injects greater certainty” into the outlook, since key opposition Labor policy proposals on negative gearing, dividend imputation, capital gains tax and the minimum wage would have been negative for the economy, especially in regard to the housing market and potentially for consumption, so it removes some downside risk to economic activity and tempers her peak to trough forecast for national house prices of a 15 per cent fall, which assumed Labor’s policy changes.
She also notes that the Coalition will have a “reasonably strong mandate to implement its income tax reform” so its low and middle income tax rebate should pass the Senate.
But the near term implications for the RBA over the next six months from the weekend’s result are “limited”.
“The case to cut in our view remains clear — persistent sub trend growth with weaker domestic demand ahead, uncomfortably low inflation too far below target, a weakening labour market and uncertain global backdrop,” she said.
“We thought the case to move in May was strong and last week’s labour market data validated our view that the labour market was already moderating in contrast to the RBA’s insistence that it is strong with upside risk.”
While expecting a speech from RBA Governor Philip Lowe tomorrow likely to shed some light, Ms Ong in any case expects two cuts in the next six months.
“To our mind and given market pricing, the key debate remains whether the cash rate will move sub-1 per cent,” she said.
“We think the return of the Coalition government and removal of some downside medium term risks may temper such expectations in the near term.
“However, the weaker starting point for growth and inflation coupled with increased global risks and uncertainties will likely, eventually, re-exert their influence.”
She recommends clients sell into any election-driven rise in yields and the currency.
11.45am: Election implications limited: Moody’s
Moody’s Investors Service says the election outcome has limited implications for the country’s credit outlook.
It says while both the Coalition and Labor have shown broad commitment to fiscal consolidation, the current monetary policy framework, and economic reform, more important differences exist around energy and climate change.
However significant changes to these policy areas are less likely with the Coalition still in charge of the House, the ratings agency says.
“Australia’s underlying economic and institutional strengths continue to support the country’s credit profile. However, the potential impact of fragmented representation in the Senate on policy making, exposure to high external liabilities, and high levels of household debt remain important credit challenges,” Moody’s says.
11.40am: Coal claims a win after poll
The coal industry says the Morrison government’s re-election will give it a boost.
Coal Council of Australia chief executive Greg Evans says the Coalition should now encourage proposals for new coal-fired power plants.
He also says the Queensland government should crease its “reckless obstruction” and let the Adani coal project proceed.
The council says strong coal demand over the next decade dictates that “cumbersome and lengthy” processes should not unnecessarily delay approvals for new coal mine developments and expansions.
11.30am: ASX trims gains amid rotation
Some of the money flowing into banks, health insurers, consumer and housing stocks is obviously coming out of expensive industrials, utilities and healthcare stocks.
For some of the offshore income earners this could be magnified a little by the bounce back in the Australian dollar.
Among Industrials, Sydney Airport is down 2.8pc, Transurban is down 1.4pc and Brambles is down 0.8pc.
In healthcare, CSL is down 0.9pc, Resmed is down 1pc and Cochlear is down 1.4pc.
Among utilities, AGL is down 1.3pc and Spark Infrastructure is down 1.5pc.
Australia’s S&P/ASX 200 has trimmed some of its extraordinary 1.7pc rise to an 11-year high of 6475.5.
But remains up 1.2pc at 6444.6 after the unexpected Coalition victory.
S&P 500 futures up 0.5pc in Asian trading, giving a positive global backdrop for now.
11.29am: Asian shares steady
Share markets in Asia have got off to a steady start as investors tried to catch their breath following another week of escalating trade tensions between the United States and China.
In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan tacked on 0.6 per cent after a steep 3 per cent loss the previous week. US S&P 500 e-mini futures also turned higher, rising 0.5 per cent following losses on Wall Street on Friday.
The Dow Jones Industrial Average fell 0.38 per cent, the S&P 500 lost 0.58 per cent and the Nasdaq Composite dropped 1.04 per cent.
Japan’s Nikkei stock index added 0.4 per cent, after data showed growth in the world’s third-biggest economy unexpectedly accelerated in the first quarter. The modest gains on Monday came even as financial markets remained on edge over the intensifying Sino-US trade war, with the Trump administration last week adding Huawei Technologies to a trade blacklist.
Reuters
11.26am: Dollar gets second wind
The Australian dollar firmed in the wake of a surprise election victory by the Coalition, although Sino-US trade tensions and bets for a local rate cut continue to keep the local currency’s gains in check.
The Aussie dollar was last at US69.20 cents on Monday, having bounced from a four-month trough of US68.65 cents.
The blip higher came after Prime Minister Scott Morrison’s Coalition pulled off a shock win in the federal election, beating the Labor Party.
“The return of a Coalition government injects greater certainty into the outlook,” said Su-Lin Ong, head of Australian fixed income strategy at RBC Capital Markets.
“We would expect some bounce in business confidence.” “It removes some downside risk to activity medium term and tempers our peak to trough forecast for national house prices of -15 per cent,” she added. Labor had proposed ending some tax breaks for housing investment that could have added pressure on already sliding property prices.
The Aussie now faces a home-grown hurdle in the form of a speech by Reserve Bank of Australia Governor Philip Lowe on Tuesday where the prospect of a rate cut is likely to be high on the agenda.
Earlier this month the central bank said an easing might be needed if the labour market did not stay strong. Since then, data has showed the unemployment rate rising to 5.2 per cent in April even as hiring beat forecasts. “We now expect that after last week’s soft readings on the labour market the RBA will cut rates in June,” said David de Garis, director of economics, markets at NAB.
“The numbers pointed to a risk that labour market spare capacity will not reduce, putting the RBA’s getting back to target inflation forecast at risk,” he added.
“NAB expects another follow-up cut in August.” The futures market implies a 62 per cent chance of a quarter point cut in the 1.5 per cent cash rate when the RBA board next meets on June 4. A move is almost fully priced for July and a further cut to one per cent is baked in by December.
Yields on three-year bonds are well under the cash rate at 1.19 per cent, having hit all-time lows last week.
Australian government bond futures were near record peaks, with the three-year bond contract steady at 98.825.
The 10-year contract added half a tick to 98.3550.
Supporting the Aussie was a statement from China’s central bank on Sunday that it would maintain the stability of its yuan within a reasonable and balanced range.
There has been speculation China would let the yuan devalue in order to keep its exports competitive and offset some of the drag from US tariffs. Investors often use the Aussie as a liquid proxy for the yuan and sold it on Friday when the Chinese currency came under pressure amid stalled trade talks.
Reuters
11.08am: Housing stocks to benefit — GS
Goldman Sachs predicts the most meaningful boost to sentiment from the Coalition’s unexpected election win will be directed to the housing sector.
The sharemarket is reacting very positively with the S&P/ASX 200 rising as much as 1.7pc to an 11-year high of 6475.5, amid strong gains in banks and health insurers.
But some of the housing-exposed stocks are also doing well, with Boral up 5pc, Stockland up 3pc, Adairs up 5.9pc.
“It is likely Labor’s policy to remove negative gearing on established housing was already contributing to the weakness in the housing market given how far ahead they were in the polls, and that this was a key area of differentiation across the major parties,” says Goldman Sachs equity strategist Matt Ross. “Having now underperformed the S&P/ASX 200 Industrials index by 90 per cent since 2014, stocks in our ‘Housing-exposed’ screen trade at an average 12-month forward P/E multiple of 12.8 times, which is 30 per cent below the S&P/ASX 200 Industrials median.”
Within that screen, he says BLD, ADH, SGP, NCK, FBU and WBC were trading at the largest discounts to their decade average P/E.
10.54am: Election reduces risk for shares — MS
The surprise victory to the incumbent Coalition party has reduced sharemarket “tail risks” that were linked to ALP’s proposed tax and policy reforms, according to Morgan Stanley strategists.
“We would expect a meaningful tactical rotation within the S&P/ASX 200, benefiting blue chip yield, banks and consumer-linked sectors,” the say.
This view has been correct so far today with the S&P/ASX 200 surging 1.7 per cent to an 11-year high of 6474.9 points.
The strategists argue that many of the risks attached to Labor’s significant and wide reaching tax and policy reform agenda have been removed.
“For Banks, some of the risks that may have arisen from negative hearing changes are diminished,” they say.
“Domestic Healthcare/Insurance and Consumer stocks should all see a sentiment boost to outlook.”
With a base level tax stimulus already legislated, focus will turn to the ability of the Coalition to pass revised tax pledges from the 2019 budget.
With the Coalition now projected to form a majority government with as many as 78 seats from the 75 it has now secured in the 151 seat lower house, it looks to have a strong mandate for those tax cuts.
Morgan Stanley strategists note that while the bulk of this package is slated for 2023, it could be brought forward in response to the slowing economy, which would “mark significant upside to our current base case expectations”.
But while the RBA’s June meeting is “live” for a potential rate cut, Morgan Stanley maintains that “the bar for a rate move outside of a Statement on Monetary Policy” is high, and there is enough that the RBA can point to that make August the most likely timing for an initial cut.
And while a return of policy status quo is likely to calm anxiety that clearly presented in impacted sectors from Labor’s proposed reforms, the reality of a slowing economy and lagged stimulus response to date keeps the door open to both further macro-economic disappointment and corporate earnings risk, they say. “Greater confidence and intentions are required to turn the cycle and encourage demand to pull activity forward,” they note. “If these spirits stay hibernated, downside risk will remain elevated.”
10.50am: Receivers appointed to Blue Sky
Embattled Brisbane-based investment empire Blue Sky Alternative Investments says Oaktree Capital Partners has appointed Mark Korda and Jarrod Villani of KordaMentha as receivers and managers of the Company.
Bradley Hellen and Nigel Markey of Pilot Partners have also been appointed as voluntary administrators of the company.
Blue Sky has also been suspended from trading on the ASX.
It comes after Blue Sky’s recent revelations that it has breached covenants in a $50m funding deal with Oaktree.
Blue Sky has been under immense pressure since March last year, when its share price was smashed by allegations from short-seller Glaucus Research that it had exaggerated its fee-earning assets under management and gouged its customers through excessive fees.
As part of its efforts to stave off collapse, Blue Sky in September took a $50m loan from Oaktree, at a sky-high interest rate of 15 per cent, that the vulture fund can convert into up to 30 per cent of the company.
10.25am: ASX soars 1.6pc
Australia’s S&P/ASX 200 has surged 1.6pc to a an 11-year high of 6464 amid lessening of uncertainty after the Coalition unexpectedly retained power in the federal election.
A surge in the financial sector is providing most of the boost, with the major banks enjoying high-single digit percentage gains.
Within the financial sector, Medibank Private jumped 10pc and NIB rose 9pc on a lessening of regulatory risk.
The consumer staples and consumer discretionary sectors are also outperforming, with Woolworths up 1pc to a 4-year high of $34.52 and JB Hi-Fi up 1.9pc.
The healthcare sector is mixed, a 7.3pc jump in Ramsay Health Care offset by falls in CSL and Cochlear.
Technology, Industrials, Communications and Energy are notable laggards.
The index is currently on track for its strongest rise since December 27 when it rose 1.9pc.
The Aussie dollar is buying US69.06c, from US68.89c on Friday.\
10.15am: Bank shares surge at open
The Australian share market has opened higher, with banking stocks surging as investors react to the Coalition’s federal election triumph. The benchmark S&P/ASX200 index was up 85.7 points, or 1.35 per cent, to 6,451.0 points at 10.15am (AEST) on Monday, while the broader All Ordinaries was up 82.2 points, or 1.27 per cent, to 6,542.4.
ANZ was up 6.15 per cent at $27.44, Commonwealth Bank was up 5.45 per cent to $76.80, NAB was up 6.77 per cent to $25.54, and Westpac was up 7.99 per cent to $27.44.
But only the heavyweight financials and consumer-related stocks were in positive territory after the first 15 minutes of trade.
Tech shares had the heaviest losses, collectively down 0.95 per cent. Wall Street fell on Friday following media reports that US-Chinese trade talks had stalled, with the Dow Jones Industrial Average finishing down 0.38 per cent, the S&P 500 down 0.58 per cent and the tech-heavy Nasdaq Composite down 1.04 per cent.
AAP
10.10am: NAB surges 7.7pc
NAB shares have surged 7.7pc to a 1-week high of $25.75 after the federal election, regaining all of its ex-dividend fall.
As well as the pro-business outcome of the election, NAB is getting an added tailwind from an upgrade to Overweight by Morgan Stanley.
NAB last up 7pc at $25.60.
10.05am: ANZ leaps 6.5pc
ANZ has surged $1.60 to a 1-week high of $27.53 in early trading.
A positive reaction to a perceived lessening of regulatory risk after the election was magnified after ANZ dived 3pc on Friday.
Morgan Stanley says RBNZ’s revocation of ANZ’s accreditation to model its own operating risks means potential share buybacks will likely be delayed and reduced.
ANZ last up 6.2pc at $27.45.
10.05am: Japan growth beats forecasts
Japan’s economy grew 0.5 per cent in the first quarter of this year, a better-than-expected result, official data showed.
The latest figure comes amid uncertainty over the global economy, including US-led trade tensions, Brexit and other factors.
9.58am: ASX 200 futures spike 1.3pc
Australia’s share market is reacting very positively to the federal election outcome.
S&P/ASX 200 futures are up 1.3pc to 6455 points in early trading suggesting the benchmark will hit a fresh decade high above 6400.
S&P/ASX 200 last 6365.3.
9.56am: Lowers risk for banks eyed
Morgan Stanley has upgraded NAB to Overweight from Equalweight and raised its target prices on the major banks by an average of 2.5 per cent following the federal election outcome.
“We believe the federal election result reduces tail risks in relation to credit quality, the mortgage market and the regulatory environment,” says Morgan Stanley’s Richard Wiles.
“ However, it does not change the fundamental outlook for the Australian banks, which face challenging operating conditions and an uncertain regulatory environment,” he adds.
“We expect some support for major bank share prices in the near-term but believe that trading multiples across the group are not cheap enough to compensate for low growth and falling returns on equity.”
He notes that the P/E multiples of ANZ, CBA, WBC were at or above historical averages ahead of the election, even though a “25-year “super cycle” for banks has come to an end”.
9.50am: Elders profit slides amid drought
Elders has posted a 34 per cent fall in the half year net profit to $27.4 million, citing drought conditions across much of Australia.
Underlying earnings before interest and tax were also down, by 27 per cent to $33.5m.
Elders also declared an interim dividend of 9c per share.
Elders’ CEO Mark Allison said Elders remained committed to its growth plan “despite the very difficult conditions being experienced by the Australian agriculture sector, including many of Elders’ clients, in the first half of the year”.
However he said a return to average winter croppings was expected.
9.46am: What’s impressing analysts
Medibank Private raised to Neutral — JPMorgan
BHP PLC raised to Buy — Liberum
GWA Group raised to Hold — Morningstar
Lendlease Group cut Hold — Morningstar
Pendal Group cut to Hold — Morningstar
Virgin Australia raised to Neutral at Credit Suisse
GWC cut to Sell — Deutsche Bank
NAB raised to Overweight — Morgan Stanley
NRW Holdings cut to Neutral — UBS
James Hardie cut to Neutral — UBS
9.40am: ASX 200 may hit decade high
Australia’s S&P/ASX 200 may hit a fresh 11-year high today after the unexpected Coalition victory in the federal election.
Traders will be watching Friday’s peak at 6398.3. A sustained break could trigger buying from those who have been expecting a pullback after an exceptionally strong 13 per cent rise this year.
Alternatively, a rejection from 6398.3 or unsustained break above that level could trigger profit taking because the index is close to Bloomberg’s bottom-up “best target price of 6385.
If the index were to break sustainably higher amid significant upgrades to earnings estimates, the next resistance level on the charts would be the December 2007 peak at 6685.
But if it were to peak early this week, the index could soon retest its 50-day moving average at 6247 and last week’s low at 6203.1.
RBA minutes and a speech by Governor Philip Lowe tomorrow may further set the scene for interest rate cuts as early as June.
But two interest rate cuts this year have arguably been priced in by the sharemarket.
Global markets are struggling again as the US-China trade war heats up with China sounding unwilling to negotiate last week.
S&P/ASX 200 last 6365.3
9.33am: Scentre in $575m Sydney sale
Scentre has sold a 50 per cent stake in Sydney’s Westfield Burwood shopping centre for $575 million.
The deal with Perth-based Perron Group represents a 4.1 per cent premium to the centre’s $1.1 billion book value in last year’s annual report. “This transaction highlights the value of Scentre Group’s extraordinary platform of 41 Westfield living centres,” Scentre chief executive Peter Allen said.
“The proceeds will provide the group with further capital to pursue our strategic objectives of creating long-term value forsecurityholders.” Scentre will use the proceeds to repay debt.
The transaction is expected to be dilutive to funds from operations per security by approximately 0.2 cents per security over the full year, but Scentre’s forecast distribution remained unchanged at 22.60 cents per security.
AAP
9.17am: Dollar lift has limits: Westpac
The Australian dollar’s rise after the federal election may be short-lived according to Westpac.
AUD/USD jumped 1pc to a 3-day high of US69.38 in early trading after the Coalition unexpectedly retained power in Saturday’s election.
But rallies should be capped by the ongoing debate over RBA rate cut timing and nerves over US-China trade relations, with probes below US69.00 possible in coming weeks, Westpac strategists say.
The exchange rate has since retreated to US68.90 and remains below US70.00c despite the increasing prospect of the Coalition getting enough support to form a majority government.
The ABC now projects the Coalition will secure 77 seats in the 151-member lower house.
RBA minutes and a speech by RBA Governor Lowe are due Tuesday.
8.49am: Incitec hikes interim profit
Incitec Pivot said first-half net profit rose sharply on the year-earlier period because of fewer asset writedowns, but that earnings fell because of operational challenges that included a rail outage and plant disruptions.
The chemical and fertilisers company (IPL) on Monday reported a net profit of $41.9 million for the six months through March. That compared to a net profit of $7.6m in the same period a year earlier.
Earnings before interest and tax, excluding material items, fell to $119m from $240m, it said. Incitec Pivot reported $141m in non-recurring charges that included a key rail closure in Queensland.
8.31am: Lynas to develop US facility
Lynas has inked an agreement with the Texas-based Blue Line to develop a rare earths facility in the US. Lynas informed the market it had signed a an MOU for a joint venture with Blue Line to develop rare earths separation capacity in the US. The moves comes as Lynas, the largest producer of rare earth materials outside of China, is under pressure to shutter its existing separation facilities in Malaysia.
More to come
8.27am: Futures point to ASX lift
The Australian share market is expected to open marginally higher as investors digest the results of the federal election.
The SPI200 futures contract was up 5 points, or 0.08 per cent, at 6368.0 at 8am (AEST), suggesting a slightly positive start for the benchmark S&P/ASX200 on Monday.
Wall Street fell on Friday following media reports that US-Chinese trade talks had stalled, with the Dow Jones Industrial Average finishing down 0.38 per cent, the S&P 500 down 0.58 per cent and the tech-heavy Nasdaq Composite down 1.04 per cent.
AAP
8.25am: Dollar pulls back
The local dollar is back below US69c after earlier spiking as much as 1 per cent in early Asian currency trading. At 8.27am (AEST) the dollar was trading at US68.97c.
8.17am: Iron ore cracks $US100 a tonne
The benchmark price of 62 per cent iron ore traded over $US100 a tonne on Friday night for the first time in five years as Vale warned it was facing the risk of a third tailings dam failure, potentially extending disruptions to its Brazilian operations.
8.09am: Copper falls for fifth week
Copper prices fell for a fifth consecutive week as the trade confrontation between the United States and China intensified.
Investors fear the dispute will damage economic growth and weaken the outlook for metals demand, with industrial metals prices down sharply from last summer when it began.
Benchmark copper on the London Metal Exchange (LME) did not trade in closing rings on Friday but was bid down 0.7 per cent at $US6055 a tonne. The metal used in power and construction has lost around 1.2 per cent this week and is trading near Monday’s three-and-a-half month low of $US6007.50. Harsher trade rhetoric from the US and China was pushing prices lower, Societe Generale analyst Robin Bhar said.
He said copper’s solid fundamentals meant prices were likely to recover to about $US6500 by the end of the year.
Reuters
8.05am: Huawei takes Google hit: Reuters
Alphabet Inc.’s Google has revoked Huawei Technologies Inc.’s Android license, Reuters reported Sunday, in a move that could cripple the Chinese tech giant’s smartphone business. The move was later confirmed by The Verge. Huawei will be restricted to using only the public, open-source version of Android, Reuters said. Effectively, it means that Huawei will be immediately cut off from receiving Android system updates, including security updates, and future versions of Huawei smartphones will not be able to use YouTube, Gmail and the Google Play store, among other features. Last week, the Trump administration moved to restrict U.S. technology sales to Huawei and certain other foreign-owned companies. The US has long claimed that telecom equipment from Huawei poses a national security risk.
Dow Jones
7.55am: Gold slips to 2-week low
Gold prices on Friday slipped to their lowest in two weeks as the US dollar advanced on the back of strong US economic data, putting the metal on track for its biggest weekly decline in a month.
Spot gold fell 0.8 per cent to $US1,276.25 per ounce, having dropped to its lowest since May 3 at $US1,274.51 earlier in the session.
The metal was down 0.7 per cent for the week, which was set to be its biggest weekly decline since April 19.
US gold futures settled down 0.82 per cent at $US1,275.70 an ounce. “The (US) dollar has strengthened due to relatively strong US economic reports and little relaxation in geopolitical tensions, all these combined has put downward pressure on gold prices,” said Jeff Klearman, portfolio manager at GraniteShares.
Reuters
7.46am: US to host Middle East forum
The Trump administration is inviting government officials and business leaders from the Middle East and Europe to Bahrain in late June to discuss the economic portion of its plan for peace between Israel and the Palestinians.
The conference is the first step in the administration’s road map for peace for the region that has been secret for two years, and is aimed at offering a vision for investment in the West Bank, Gaza and neighbouring countries, officials said.
The workshop won’t include any discussion of the political plan, which will address issues including borders, the status of Jerusalem, security and refugees, officials said.
The White House said the conference, hosted in partnership with Bahrain on June 25 and 26, will convene officials to brainstorm and garner support for economic investments and initiatives that could be made possible by a peace agreement.
Dow Jones
7.44am: Property boost tipped
Fewer properties were taken to auction across the country on election weekend, but analysts predict the return of a Coalition government may increase market confidence in coming weeks with changes to negative gearing less likely.
There were 917 properties up for auction across the country, returning an average preliminary clearance rate of 57 per cent. Over the previous week, 1218 homes were auctioned and the final auction clearance rate was 54 per cent, the highest final result since last September.
CoreLogic’s national auction commentator Kevin Brogan said the week of a federal election was typically characterised by reduced auction activity, and that it would be interesting to watch the market following the declaration of the election result.
“There has been a wait-and-see approach employed among residential property investors in terms of the result of the election,” Mr Brogan said.
6.31am: Dollar dazzles in election wake
Australia’s dollar jumped at the market open following the surprise Coalition victory over the weekend. The currency leapt 0.8 per cent stronger in early trade to US69.26c after last week sinking to the weakest level since January.
The Aussie sank to US68.65c last week amid a rise in the unemployment rate in April and Beijing dashing hopes the US-China trade spat would be ended soon.
6.29am: ASX set for ‘relief rally’
Financial markets are expected to receive a boost from Scott Morrison’s surprise Coalition victory, while the economy is set to benefit from a wave of pent-up investment.
The defeat of Labor is expected to resonate positively with investors, business and consumers concerned about the economic and financial impact of the opposition’s ambitious reform program, including plans to wind back negative gearing and capital gains tax concessions for investment properties, scrap cash refunds on excess franking credits and increase spending.
While Reserve Bank governor Philip Lowe is expected to strengthen the case for interest rate cuts in a landmark speech tomorrow, the effective removal of anxiety about Labor’s policy agenda was expected to provide a much-needed shot of confidence.
“The election result means an end to potential Labor policies such as removing negative gearing and preferential tax treatment of investment properties, ending excess franking credits to shareholders and raising the minimum wage to the level of a living wage.”
AMP Capital head of investment strategy and chief economist Shane Oliver is tipping a positive sharemarket reaction.
6.27am: OPEC closet to retaining cuts
OPEC and its allies on Sunday inched closer to continuing their existing production targets through the end of the year, delegates said, as fear of a returning oil glut outweighed apprehensions around Middle East conflict.
But the group has also been looking at a handful of scenarios, some of which would involve easing production curbs without changing targets.
Members of the Organisation of the Petroleum Exporting Countries and its Russia-led allies are meeting in Jeddah to study production options that the group will finalise at a summit next month in Vienna.
The group agreed last December to cut output by a collective 1.2 million barrels a day. The decision led to a 33 per cent increase in oil prices this year, but the pact ends in June. The officials gathering over the weekend are looking for a way forward for the second half of this year that won’t upset oil markets.
Dow Jones
6.25am: Trade tensions crimp Wall St
Stocks lost gains in the final hour of trading as concerns over negotiations between Washington and Beijing were only partially offset by a delay in an expected US decision on whether to impose new tariffs on vehicle and auto-parts imports.
The Dow Jones Industrial Average fell 98 points, or 0.1 per cent, to 25764, after falling about 200 points in early trading and then sitting on modest gains for much of the afternoon. The S&P 500 dipped 0.6 per cent, as losses in energy and industrial shares in the broad index offset gains in utility stocks. The technology-heavy Nasdaq Composite lost 1 per cent.
The Trump administration said it would put off for 180 days a final decision on whether to impose broad tariffs on cars produced by major trading partners including the European Union and Japan, citing national-security concerns.
“The fact that we got this flexibility on auto tariffs is crucial because the market is trying to determine if both sides are taking a hardline approach,” said Jeff Sica, chief executive at Circle Squared Alternative Investments. “Some investors are viewing these concessions as a breaking of the stalemate.”
Dow Jones
6.23am: European markets slip
European stocks were under pressure, with the Stoxx Europe 600 retreating 0.4 per cent.
For the week, the index was up 4.37 points, or 1.16 per cent, to 381.51. The FTSE 100 closed slightly down, although a weak pound limited the losses for the large-cap index compared to other European markets.
“A quiet day for data has meant that markets have little to go on apart from the ups and downs of the US-China spat, but the past week has pointed to renewed bullishness among investors, with a commendably strong bout of dip buying going on over the last few sessions,” Chris Beauchamp, analyst at IG, said.
The French CAC index was down 9.88 points, or 0.18 per cent, and up 110.79 points, or 2.08 per cent, this week to 5438.23. And the German DAX was down 71.43 points, or 0.58 per cent, but up 179.11 points, or 1.49 per cent, this week to 12238.94.
Dow Jones
6.18am: Oil slips ahead of key meeting
Oil futures finished lower, with US prices down for the first time in four sessions, but up for the week, as any potential demand worries tied to stockmarket volatility were offset by supply concerns linked to Middle East tensions.
The price moves come ahead of a meeting Sunday of the Joint Ministerial Monitoring Committee of members and non-members of the Organisation of the Petroleum Exporting Countries in Jeddah, Saudi Arabia. The committee monitors compliance with the OPEC-led production-cut agreement.
Although this weekend’s gathering is a smaller-scale meeting, it could be a litmus test for oil producers’ appetite to extend the current production cut agreement into the second half of the year, according to ING strategists, in a note.
OPEC and allied producers will meet in Vienna on June 25-26, just ahead of the expiration of the OPEC-led production cut deal.
West Texas Intermediate crude for June delivery fell 11 cents, or 0.2 per cent, to settle at $62.76 a barrel. After posting gains in the last three session and settling Thursday at $62.87, the highest finish for a front-month contract since May 1, prices climbed 1.8 per cent for the week, according to Dow Jones Market Data.
Dow Jones
6.15am: Gold dips to two-week low
Gold futures fell to settle at their lowest in more than two weeks, also down from the week-ago finish, on the back of a jump in US consumer sentiment and a slightly firmer dollar.
“The risk-off tone is not delivering a strong bid for gold, and that is mainly attributed to the overall strength we saw with US data this week and optimistic outlooks we saw on the corporate front,” said Edward Moya, senior market analyst at Oanda.
June gold on Comex lost $10.50, or 0.8 per cent, to settle at $1,275.70 an ounce. Prices marked the lowest most-active contract finish since May 2, according to FactSet data. Declines left prices for the most-active contract down 0.9 per cent for the week.
The gold-backed SPDR Gold Shares exchange-traded fund declined 0.9 per cent, trading 0.8 per cent lower on the week.
Dow Jones
6.13am: Google to refund advertisers
Google has agreed to refund advertisers for ads purchased through its ad marketplaces that ran on websites with fraudulent traffic, following a lawsuit claiming the tech giant was withholding those back-payments, according to court documents and people familiar with the situation.
Dow Jones
6.09am: US reaches deal with Canada, Mexico
he administration has reached agreements with Canada and Mexico that end US-imposed tariffs on steel and aluminium imports, President Trump said Friday, removing a major barrier to the three countries’ new trade pact.
White House Delays Decision on Auto Tariffs for 180 Days The Trump administration said it would put off for 180 days a decision on whether to impose broad tariffs on auto and auto-part imports, as discussions with the EU and Japan continue.
Dow Jones
More Coverage
ASX treads water before US jobs data; CBA and Westpac hit highs
ASX ends flat as markets await key US jobs numbers. CBA and Westpac hit record highs and NAB an 18-year high. Domino's jumps 21 per cent, as Collins Foods and Nick Scali also gain. Amazon falls after earnings disappoint.
ASX ends up 0.5pc; Brookfield enters Insignia battle; former Star CEO cops ban
ASX 200 gains 0.5 per cent, led by resources, tech, property, industrials and communications. Macquarie weighs on financial sector. Google owner Alphabet's earnings disappoint. Brookfield lobs new offer to takeover target Insignia. Amcor lifts on reaffirmed guidance, estimates win. Former Star CFO cops ban.