ASX reverses losses as energy sector lifts

The materials sector also rose led by lithium miner Pilbara Minerals, who rose 16 per cent to 72.5¢. The company announced both a funding package for stage 2 of its Pilgangoora expansion and a non-binding memorandum of understanding with steel-maker POSCO which will see the companies consider a larger South Korean joint venture chemical conversion facility.

Healius (formerly known as Primary Health Care) shares closed 7.8 per cent higher at $2.63 after it received an unsolicited and highly conditional proposal from Jangho Hong Kong to acquire all of the shares in the company it didn’t own. The company already controls 15.93 per cent of the company and its offer is worth $3.25 per share.

Kathmandu announced its sales during the key December period had been below expectations. Same-store sales fell 1 per cent in the 22 week ended December 30, led by weakness in New Zealand. Its shares closed 14.1 per cent lower at $2.25.

Investors interpreted Kathmandu’s result as hinting at a weaker December sales period across the board. Myer shares fell 2.4 per cent to 41¢, Baby Bunting slid 4.5 per cent to $2.14, Super Retail Group declined 5.4 per cent to $6.46, JB-Hi-Fi slipped 4.3 per cent to $20.68 and Harvey Norman closed trade at $3.11, down 1.6 per cent.

How the market performed on Thursday. 

The Australian dollar touched a 10-year low during trade on Thursday with NAB’s head of FX strategy Ray Attrill declaring it a “flash crash” as it fell by 5.6 per cent in the space of just three minutes.

Stock watch

Orica

UBS initiated its coverage on Orica with a ‘buy’ recommendation, saying the improving explosive volumes underpinned a solid earnings recovery. In a note from 17 December 2018, the broker said it saw potential for the company to continue to extend its position in the market. “Orica is a leading blasting technology services provider as well as the world’s largest supplier of ammonium nitrate explosives,” noted analyst Nathan Reilly. “We see scope for Orica to extend its leadership position in blasting technologies as the mining industry is increasingly focused on developing autonomous operations and boosting productivity.” The broker gave it a target price of $18.86, at a 13.1 per cent premium to its $16.67 share price at the time of the note’s release.

What moved the market

Major banks

The major banks underperformed the S&P/ASX 200 for total shareholder return during December however the result was slightly better than the rest of 2018. In the past year, the major banks underperformed the market total shareholder return by 7.5 per cent on average according to Morgan Stanley. ANZ was the worst hit of the banks, down 8.7 per cent while Westpac slid 3.6 per cent and NAB fell 2.3 per cent. Commonwealth Bank was able to lift during December, up 1.6 per cent. Bendigo and Adelaide Bank also rose during the month, up 1 per cent and Bank of Queensland fell 2.3 per cent. During the same period, the ASX 200 Accumulation Index fell 0.1 per cent.

Copper

Copper prices hit a three and a half month low on Wednesday as concerns about economic growth and demand weighed investor sentiment. China’s disappointing manufacturing data on Wednesday showed factory activity in the country contracted for the first time in 19 months, as domestic and exports orders weakened. The price of benchmark copper on the London Metal Exchange closed 2.1 per cent lower at $US5,842 a tonne, its lowest level since September 11. China accounts for half of global copper consumption and a slowdown in the country’s factory input is likely to impact demand.

 

Renminbi

The Chinese renminbi was resilient during the final few months of trading in 2018 and even strong on Wednesday despite the disappointing data from China. The currency has been stable at around 6.85 against the US dollar despite the Chinese equity market falling. “One possible explanation is that the PBOC has been intervening to shore up the currency, in a bid to preserve the fragile trade truce struck with the US at the start of last month,” said Capital Economics markets economist Oliver Jones. “Another likely explanation is that investors have become a lot more concerned about the outlook for the US economy in the meantime, having previously been quite optimistic.”

Apple

Local tech stocks were able to avoid a sell-off after Apple cut its first quarter revenue forecast from $US93 billion ($134.1 billion) to $US84 billion ($121.2 billion). Apple chief executive Tim Cook told shareholders the downgrade had been caused by economic deceleration, particularly from China. Apple shares sold off in after hours trading but Australian tech stocks fared better. Wisetech Global, Altium and Xero all closed higher on Thursday while Afterpay Touch and Appen shares traded higher earlier, but closed the session slightly lower.

Local tech stocks were able to avoid a sell-off after Apple cut its first quarter revenue forecast from $US93 billion ($134.1 billion) to $US84 billion ($121.2 billion). AFR

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