Mining helps ASX claw back ground

Buying in miners and energy stocks helped the ASX claw back some of Wednesday’s heavy losses, while an oil price recovery lifted energy names.


The benchmark S&P/ASX 200 Index added 0.4 per cent, taking it back above the 5700 mark to 5708, while the broader All Ordinaries also rose 0.4 per cent.

Most sectors traded in the black, recovering some of the ground lost on Wednesday. The biggest single support for the index was the materials sector, which added 0.8 per cent, despite another sharp fall in the iron ore price, which has now shed 8 per cent for the week to a touch under $US85/tonne.

Buoyed by some welcome strength in crude oil prices, BHP Billiton added 1.1 per cent, while Rio Tinto ended the day flat and Fortescue Metals eased 0.2 per cent. South32 was a standout performer, climbing 3.8 per cent.

Patersons Securities economist Tony Farnham said some of the strength in mining could be attributed to a positive session for BHP in New York, which meant it started the day on a strong footing.

Another sector to show strength was utilities, with the index up 0.9 per cent, while the day’s best performing corner of the market was energy, as Origin Energy and Oil Search both climbed by more than 2 per cent.

Looking ahead, two key US events will impact markets overnight. The first is a speech by Federal Reserve chair Janet Yellen – whose comments will be shed further light on the Fed’s thinking a week after it raised interest rates. The second is a crucial vote on the repeal of Obamacare.

The perception that this vote would fail was a key factor in driving the mid-week sell-off on Wall Street. Should it fail as expected, it’s possible markets will fall further. “Markets are priced off the back of assuming Trump will get his fiscal reflation strategy in place,” Mr Farnham said. “If it fails, the Trump trade will lose momentum.”

The banking sector traded mostly flat, failing to recoup its gains from losses earlier this week. CBA managed to rise 0.3 per cent, NAB added 0.2 per cent, while ANZ was flat and Westpac shed 0.2 per cent.

Gold prices hovered just below the three-week peak hit in the previous session, down 0.2 per cent to $US1246.51 per ounce. The All Ordinaries gold index closed down 0.8 per cent, giving up about half of its gains from Wednesday.

Stock watch: JB Hi-Fi

Investors in JB Hi-Fi enjoyed a surprise rally in the stock on Thursday. The company added 3.4 per cent to $24.23 – the biggest daily gain in four months. There was no apparent news driving the gains, but it’s possible that a few short sellers found themselves in a bit of a squeeze. The stock has tumbled 13.6 per cent in 2017, despite the retailer delivering strong earnings growth mid-February. The company posted a net profit rise of 16 per cent on a 23.6 per cent jump in sales, and boosted the interim dividend by 14 per cent. The serial outperformer is consequently still loved by analysts, six of which have a ‘buy’ rating on the stock, seven rate it a ‘hold’, and just one a ‘sell’.

Population growth

Population is increasingly the key driver of Australia’s economic performance, UBS economist George Tharenou noted, following ABS numbers showing that Australia’s population rose to 24.22 million in September last year. “Since the GFC, population growth (averaging 1.6 per cent per annum) contributed two-thirds of GDP growth (averaging 2.4 per cent year-on-year), double its contribution in the prior 15 years,” Tharenou said. “Indeed, GDP per capita growth has dropped sharply from its pre-GFC trend of two and a half per cent year-on-year, to under 1 per cent year-on-year now.”

Populism rising

Populism is at its highest level since the 1930s ??? says the founder of the world’s largest hedge fund. Bridgewater Associates’ Ray Dalio, in a post on LinkedIn, looked at populism in the developed world. “It is one of those phenomena that comes along in a big way about once a lifetime???like pandemics, depressions, or wars,” Dalio said, putting the populist movement in unenviable company. Dalio and his colleagues arrived at this “archetypical populist template” by studying 14 past populist leaders in 10 different countries

New Zealand holds rates

New Zealand’s central bank held its benchmark rate at a record low and signalled no rush to tighten as global uncertainties counteract emerging inflation pressures in the local economy. “Monetary policy will remain accommodative for a considerable period,” RBNZ governor Graeme Wheeler said in a statement Thursday morning after holding the official cash rate at 1.75 per cent. “Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.”


Sigma Pharmaceutical rose 2.5 per cent on news it would extend a share buyback combined with solid earnings growth. The drugs distributor and pharmacy support provider lifted its full-year profit by 5.3 per cent to $53.18 million and confirmed its previous guidance of at least 5 per cent growth in underlying earnings in 2018. It also said it would buy back another 10 per cent of shares on issue. Revenue was partly boosted by sales of Hepatitis C drugs after they were listed on the Pharmaceutical Benefits Scheme, while sales to China more than doubled.