It has been a stellar start to the week with the Australian share market hitting a new 7 month high (taking us back to levels where the ASX last traded in September 2018). The S&P/ASX 200 index is 45 points higher or 0.7 per cent higher at 6,238. On the futures market the SPI is 32 points higher.
We had positive leads from the get-go, with Wall Street building on its strongest start to year in 3 decades. On Friday, the Nasdaq gained 0.8 per cent with Amazon shares rising 2 per cent on plans to open a low price grocery chain, while the S&P gained 0.7 per cent, hitting a new 4 month high.
Australian reporting season wrap
Reporting season wrapped up last week with UBS saying the market is now expected to deliver 3.8 per cent EPS growth in FY19, down from 6.9 per cent in FY18.
A major upside surprise was better than expected capital management with companies paying out more dividends.
Positive surprises in the large-caps results came from Cleanaway Waste Management (ASX:CWY), Fortescue (ASX:FMG), Goodman (ASX:GMG), Insurance Australia Group (ASX:IAG), Magellan Financial Group (ASX:MFG) and Ramsay Health Care (ASX:RHC).
Reece (ASX:REH) had its buy rating downgraded with Citi dropping its 12-month price target from $13.18 to $12.58. Its 1H19 revenue and earnings (underlying EBITDA) were 5 and 3 per cent respectively above Citi’s expectations. Its trading 0.2 per cent higher at noon.
Local economic news
Profits and wages are continuing to rise while inventories fell according to the Australian Bureau of Statistics (ABS) latest Business Indicators publication for the December quarter. Inventories fell 0.2 per cent in the quarter in seasonally adjusted terms, while over the year, it rose 1 per cent. This data is a direct input to Wednesday’s economic growth figures.
Dwelling approvals fell in January 3.2 per cent in January in trend terms, while total dwellings rose 2.5 per cent in January in seasonally adjusted terms with the most approvals seen in WA (28.8 per cent). Dwelling approvals are a leading indicator for home building.
EQT Holdings (ASX:EQT) has appointed James (Jim) Minto as the Deputy Chairman to the chair, Jeff Kennett. James (Jim) has been on the board since March 2017. Prior to joining EQT he held senior roles with TOWER and was formerly the Chair of the Australian Superannuation Funds of Australia (ASFA). Shares EQT Holdings (ASX:EQT) are trading 1 per cent higher at $25.00 at noon.
Westgold Resources (ASX:WGX) which is a major shareholder of the Cue gold project in WA’s Murchison district advised its term sheet with Musgrave Gold (ASX:MGV) expired. It comes after Westgold reported its Cue Gold operations generated an earnings (EBITDA) loss Musgrave will continue to drill the new gold discovery. Last week Westgold terminated its term sheet with Doray Minerals (ASX:DRM) after completing due diligence and deciding not to buy the Andy Well and Gnaweeda Gold projects. Over the half year, Westgold Resources (ASX:WGX) reported a consolidated loss of $17.8 million, following the integration of its mine contracting arm (Australian Contract Mining). Today its shares trading 6.8 per cent lower at $1.10 at noon.
Best and worst performers
The best-performing sector is S&P/ASX Consumer Staples, adding 1.7 per cent, while the worst performing sector is S&P/ASX Real Estate Investment Trusts, shedding 0.2 per cent. However, outside the majors, the smaller tech sector is up the most with Afterpay (ASX:APT) bouncing.
The best performing stock in the S&P/ASX 200 is Bellamy's Australia (ASX:BAL) rising 8.2 per cent to $9.55 followed by shares in Bingo Industries (ASX:BIN) and Afterpay Touch Group (ASX:APT) trading 6.7 per cent higher at noon.
The worst performing stock in the S&P/ASX 200 is Evolution Mining (ASX:EVN),dropping 4.7 per cent to $3.43, followed by shares in St Barbara (ASX:SBM) and Northern Star Resources (ASX:NST).
Commodities and the dollar
Gold is trading at $US1,295 an ounce.
Iron ore price rose 3.1 per cent to US$87.92
Iron ore futures are pointing to a rise of 2.8 per cent.
One Australian dollar is buying 70.84 US cents.