Australia’s manufacturing back in growth phase: Aus shares 0.1% higher at noon

Market Reports

by Jessica Amir

The Australian share market is tracking slightly higher today, with the market absorbing a suite of mixed economic data.

It comes despite the ASX having mostly stronger leads to follow from Wall Street overnight, with the S&P 500 rising 0.9 per cent and closing off its best January since 1987.

Over half of the major ASX200 sectors are trading higher today, while the best performer has been Healthscope (ASX:HSO), which is trading at eight-month highs after the private hospital operator agreed to go ahead with the $4.4 billion Brookfield takeover (for more news on Healthscope, check out our Company News section).

The S&P/ASX 200 index is 0.1 per cent or 6 points higher at 5,871 points at noon. On the futures market the SPI is 4 points higher.

Local economic news

Australia’s manufacturing index bounced back into positive territory, rising 2.5 points to a reading of 52.5 in January 2019, taking the index (The Australian Performance of Manufacturing Index (Australian PMI)), back above the key 50-point threshold level, which separates expansionary and contraction phase). It was also welcome news as the industry was expected to only grow to a reading of 51.

The growth largely came on the back of mild improvements in sales, new orders, exports and production. The prior reading in December 2018 was flat, after the industry had grown for 26 continuous months.

Meanwhile, the cost of various business costs, known as producer prices or the producer price index (PPI) rose 0.5 per cent in the December quarter, according to the ABS. This was less than consensus/expected (0.6 per cent).

Company news

One of worst ASX200 performers at noon is salary packaging, fleet management company, Smartgroup Corporation (ASX:SIQ) which released shares from voluntary escrow as part of the purchase of Fleet West. It reversed about a week of gains on the ASX, but it’s now clawing back some earlier losses and is 5 per cent lower at $9.95 at noon. However, this year, its shares are about 12 per cent higher in January.

Lithium company, Orocobre (ASX:ORE) released pumping test results from its Cauchari JV property, in the Jujuy Province of Argentina, saying it found 'excellent characteristics' for future brine production at the site. Excellent results ‘both in terms of lithium concentration and pumping characteristics. The exploration program is managed by JV partner, Advantage Lithium Corp, with ORE Orocobre 34 per cent of the company. Shares in Orocobre (ASX:ORE) are trading 3 per cent lower at $3.23 at noon.

Air New Zealand (ASX:AIZ) has dropped its earnings guidance for the 2019 financial year, on the back of global Rolls-Royce engine issues. The NZ carrier dropped its underlying earnings before tax from $425 million to $525 million to be in the range of $340 million to $400 million, for the year ending 30 June 2019. Air New Zealand (ASX:AIZ) shares are trading 2 per cent lower at $2.65 at noon. 

Best and worst performers

The best performing sector is S&P/ASX Utilities adding 1 per cent, while the worst performing sector is S&P/ASX Energy, losing 0.9 per cent, but oil prices are trading higher with WTI eyeing its biggest January gain on record.

The best performing stock in the S&P/ASX 200 is Healthscope (ASX:HSO), rising 3.8 per cent to $2.45 at noon, followed by shares in Appen Limited (ASX:APX) and Afterpay Touch Group (ASX:APT).

The worst performing stock in the S&P/ASX 200 is Smartgroup Corporation (ASX:SIQ), capping gains after it has shed 4.9 per cent to $9.90 at noon, followed by shares in Syrah Resources (ASX:SYR) and Vocus Group Limited (ASX: VOC).

Commodities and the dollar

Gold is trading at $US1,321 an ounce and it’s likely to end January in positive territory and for the fourth month.
Iron ore price rose 3.4 per cent to US$85.34, overnight. 
Iron ore futures are pointing to a rise of 3.8 per cent.
One Australian dollar is buying 72.65 US cents.

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