By Lucy Battersby and David Scutt
The Australian stock market managed to end the week higher on Friday, but was flat for the Friday session, despite many gold mining companies losing close to 10 per cent of their value.
Gold prices dropped 2.7 per cent over the course of the week, from $US1510 per ounce on Monday down to a three-month low of $US1469 on Friday afternoon. Towards the end of the week traders moved away from safe havens such as bonds and gold and back into risky assets after comments from senior Chinese officials that both the US and China would remove tariffs. However, there was mixed reports about whether the White House would follow through with these plans.
While gold and real estate dropped, the building product suppliers enjoyed a surge.Credit: Joe Armao
The move away from bonds pushed down stocks that are usually synchronised to bond prices such as commercial real estate and utilities, with both these sectors ending Friday's session down about 1.2 per cent, compared to a 0.04 per cent drop in the broader market.
The S&P/ASX 200 ended Friday 2.5 points lower, but over the week it gained 55 points and managed to close above 6700 for two sessions in a row. While gold and real estate dropped, the building product suppliers enjoyed a surge as one of the biggest companies in the sector - James Hardie - painted a rosy picture of future profits.
James Hardie hit fresh all-time highs of $27.64 as a flurry of analyst upgrades came through when it lifted its full-year profit forecast to between $US340 million ($493 million) and $US370 million. It had previously forecast between $US325 million and $US365 million. The information technology sector was similarly boosted by analyst target price upgrades for Xero Group, which gained 8.4 per cent over the week to close at $75.77.
Meanwhile, online real estate listing site REA Group ended the week 5.8 per cent lower after reporting a 9 per cent drop in revenue due to a slower real estate market. And its majority owner, News Corp, closed 5 per cent lower at $19.42 after revealing a $US211 million ($305.8 million) net loss for the first quarter after writing down the value of its US marketing business.
Reserve Bank Governor Philip Lowe released a report on Friday lowering domestic growth expectations. Credit: Alex Ellinghausen
The Reserve Bank pushed dark clouds over Friday's session when its November monetary policy statement revealed the economy was now expected to expand by 2.25 per cent this year, lower than the 2.4 per cent the RBA forecast in August and well short of the 3.3 per cent it predicted last November.
When deciding to cut interest rates to a new record low of 0.75 per cent in October, the bank acknowledged said it was "mindful that rates were already very low and that each further cut brings closer the point at which other policy options might come into play".