Choppy session, property prices fall more than expected: Aus shares 0.1% up at noon

Market Reports

by Jessica Amir

The Australian stock market is having a fairly volatile session, going in and out of negative territory, absorbing a suite of economic data that has come out, as well as some financial results from a top 200 play.

The S&P/ASX 200 index is 7 points or 0.1 per cent higher at 6,198 points. On the futures market the SPI is 2 points higher.

Local economic news

RBA board meeting minutes didn’t mention the cash rate would likely be appropriately changed this year however RBA members say there are significant and remaining uncertainties and the probability of a rate drop and rise are evenly balanced. The central bank says,  financial markets have priced in rates will be dropped ‘by early 2020, following the earlier shift from expected future increases in policy rates.’

The RBA also noted the housing market decline ‘adjustment’, continued with house prices in Sydney, Melbourne and Perth falling further and, and turnover in the housing market had fallen ‘significantly’. Credit conditions tightened and the demand for housing credit noticeably slowed, while mortgage rates remained low.

Forecasts remain that GDP will be about 3 per cent over 2019 and a further drop in the unemployment rate to 4¾ per cent over the next couple of years. Wage pressures and inflation are expected to gradual pick-up.

And the Bureau of Statistics announced property prices fell 2.4 per cent in the December 2018 quarter, this was more than the 2 per cent fall expected by the market.

Company news

Thermal coal producer New Hope (ASX:NHC) reported growth across all key metrics in its half-year results to 31 January 2019, with profit before tax and non-regular items, rising 33 per cent on the prior corresponding period to $229 million. Its EBITDA grew 31 per cent and its interim dividend rose 33 per cent to 8 cents per share. The bolstered results came from the company increasing its stake in the Bengalla coal mine. Morningstar has the material stock at a $3.50 price for fair value. The company has returned 121 per cent in average shareholder returns year-on-year, while over the last 3 years it’s gone up on average 57 per cent. Shares in New Hope (ASX:NHC) are trading 9.7 per cent lower at $3.98 at noon, perhaps at the hands of profit taking or market expectations for its results. 

The Intellectual property market is heating up. Xenith IP’s (ASX:XIP) takeover by top 200 IP firm, IPH (ASX:IPH) has been ruled out of favour, and ‘not superior’. Meantime, Xenith, the $89 million dollar company, continues to recommend the proposed merger between Xenith and QANTM (ASX:QIP). The QANTM Board is also continuing to support the merger between with Xenith, saying it has compelling financial, strategic, cultural and operational benefits. Shares in Xenith IP’s (ASX:XIP) are trading 1.9 per cent lower at $1.81 at noon.

Best and worst performers

The best-performing sector is Utilities, adding 1.1 per cent, followed by Materials, Consumer Discretionary and Telcos, while the worst performing sector is Healthcare, shedding 1.2 per cent.

The best performing stock in the S&P/ASX 200 is Ausnet Services Limited (ASX:AST), rising 2.5 per cent to $1.82 followed by shares in Estia Health Limited (ASX:EHE) and Oz Minerals Limited (ASX:OZL).

The worst performing stock in the S&P/ASX 200 is New Hope Corporation Limited (ASX:NHC), which is 9.7 per cent lower at $3.98 at noon, followed by shares in Emeco Holdings Limited (ASX:EHL) and Caltex Australia Limited (ASX:CTX).

Commodities and the dollar

Gold is trading at US$1,305 an ounce.
Iron ore price rose 2 per cent to US$88.26
Iron ore futures are pointing to a rise of 0.4 per cent.
One Australian dollar is buying 70.98 US cents.

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