ASX new 7-month high, Aus growth weaker than expected: Aus shares close 0.8% higher

Market Reports

by Jessica Amir

It has been a strong day of trade for the Australian share market, setting a new 7 month high. After opening in the black, despite negative Wall Street leads. The local bourse continued to rise throughout the session, with all the sectors posting a profit. 

Mining stocks led the rally today, with lithium play, Pilbara Minerals (ASX:PLS) rising 5.7 per cent.

At the closing bell the S&P/ASX 200 index with finished with a profit of 0.8 per cent or 46 points higher at 6,246.

Futures

Dow futures are suggesting a fall of 71 points.
S&P 500 futures are eyeing a slip of 6 points.
The Nasdaq futures are eyeing a fall of 13 points.
And the ASX200 futures are eyeing a 44 point rise tomorrow morning

Local economic news

Australia’s economy grew by 0.2 per cent in the December quarter, below consensus [0.3 per cent] and forecasted growth [0.6 per cent] for the quarter.

Meanwhile, the Reserve Bank of Australia Governor Philip Lowe says, the probability of a rate move is evenly balanced, with plausible scenarios for the next interest rate move to be up, or down, ‘at the moment, the probabilities appear reasonably evenly balanced’.

In the Governor’s speech this morning, Lowe highlighted the economy, is painting a softer picture, not only with weaker GDP in Australia but internationally as well. He said, ‘there is growing tension between strong labour market data and softer GDP data’.

Lowe also warned that if lenders don’t take credit risk, ‘the economy will suffer’.

UBS is now excepting the RBA to cut rates in November, joining Westpac in a string of companies with this line of thinking.

Company news

Defence and space company, Electro Optic Systems (ASX:EOS) has teamed with Hanwha Defence Australia, to tender for an armoured vehicle deal with the Commonwealth of Australia. The multi-billion-dollar defence tender is for infantry fighting vehicles for the Australian Army. And if the duo, the Hanwha-EOS team win the contract, the EOS work share in the program will exceed $1 billion over 8 years for equipment purchase. Shares in Electro Optic Systems (ASX:EOS) closed 2.4 per cent higher at $2.58.

Myer (ASX:MYR) announced its results today showing its net profit after tax grew 3.1 per cent to $41.3 million, better than the market expected for the first half 2019 year. Total sales fell 2.8 per cent to $1.67 billion, while online and omnichannel sales soared 18.6 per cent higher to $151.2 million.

Infant formula business Bubs Australia (ASX:BUB) has confirmed its intentions to form a joint venture with Beingmate Baby & Child Food Co., to distribute Bubs' products in China. The companies have entered a non-binding memorandum of understanding with the intent of eventually forming a joint venture in Shanghai.

Australian energy company, AusNet Services (ASX:AST) has successfully priced a Norwegian Kroner 1.5 billion, 10-year bond issue to raise $246 million. The proceeds will be used to refinance existing debt and fund capital expenditure. AusNet Services has an A- Standard & Poors investment grade rating.

Best and worst performers of the day

The best performing sector was S&P/ASX Materials gaining 1.1 per cent while the sector with the least profits was S&P/ASX Utilities, gaining 0.3 per cent.

The best performing stock in the S&P/ASX 200 was Western Areas Limited (ASX:WSA), rising 6.8 per cent to close at $2.36. Shares in Independence Group (ASX:IGO) and Pilbara Minerals Limited (ASX:PLS) followed higher.

The worst performing stock in the S&P/ASX 200 was Automotive Holdings Group Limited (ASX:AHG), dropping 3.4 per cent to close at $1.97. Shares in Ardent Leisure Group Limited (ASX:ALG) and Perpetual Limited (ASX:PPT) followed lower.

Asian markets

Japan’s Nikkei has lost 0.7 per cent, Hong Kong’s Hang Seng has gained 0.2 per cent and the Shanghai Composite has gained 0.9 per cent.

Commodities and the dollar

Gold is trading at $US1,287 an ounce.
Iron ore price fell 0.8 per cent to US$87.03
Iron ore futures are pointing to a rise of 0.2 per cent.
Light crude is $0.31 lower at US$56.28 barrel.
One Australian dollar is buying 70.34 US cents.