Competition regulators take action: Aus shares up 1.1% over week

Market Reports

by Katrina Bullock

The Aussie market rebounded from yesterday's sell off to a new weekly high. The ASX200 opened higher despite mixed leads from the US, which has seen a drop in trading volume prior to the US earning season. The ASX200 saw an early rally and tracked sideways throughout the afternoon to gain 0.9 per cent at the close. The Consumer Staples, Financials and Info Tech sectors drove the most gains today. Competition regulators were hard at work with the ACCC instituting proceedings against iSelect (ASX: ISU) and Spark New Zealand (ASX:SPK) copping a penalty of NZ$675,000 for operational and billing breaches. Over the week all sectors rose, with Energy leading the charge thanks to strong oil prices.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 53 points higher to finish at 6,251.

Over the week, the market has gained 70 points or 1.1 per cent.

Broker moves

Citi has downgraded organic food and formula company, Bellamy's Australia (ASX:BAL) from a buy to a neutral, with a 12-month price target of $10.50. It comes as the company continues to see delays in receiving its SAMR registration and the new formula fails to gain clear momentum. Shares in Bellamy's Australia (ASX:BAL) closed 2.3 per cent lower at $9.87.

Futures market

Dow futures are suggesting a rise of 38 points.
S&P 500 futures are eyeing a rise of 3 points.
The Nasdaq futures are eyeing a lift of 2 points.
And the ASX200 futures are eyeing a 45 point rise on Monday morning. 

Economic news

The Reserve Bank of Australia released its Financial Stability Review today. The review shows that global economic growth has slowed following a period of above-trend growth. Asset prices remain elevated and have largely recovered from the sharp decline we saw late last year.

Domestic economic growth has also eased and the housing market remains weak. Nationally, falling housing prices have been driven by weaker demand and increased housing supply, as well as tighter supply of housing credit from improved lending standards. These factors combined with the decline in mining activity in Western Australia have caused a decline in housing prices of almost 20 per cent in the state. Measures of financial stress among households are generally low and households remain well placed to service their debt given low unemployment, low interest rates and improvements to lending standards. While housing credit growth in Australia has slowed, household debt is still at a high level. Nationally the unemployment rate has remained around 5 per cent since the previous Review and corporate profit growth has also been strong. However, gross domestic product growth in Australia slowed in the second half of 2018.

Overall, the Review concludes that the financial system appears much better placed to respond to a range of challenges than it was a decade ago.

Company news

iSelect (ASX: ISU) has been taken to the Federal Court by the Australian Competition and Consumer Commission (ACCC). The ACCC alleges that iSelect engaged in misleading or deceptive conduct and false or misleading representations in relation to its energy plan comparison service. ACCC Chair Rod Sims commented saying “iSelect told consumers they would help them compare all energy plans available in their area from all their partner retailers”. The ACCC alleges that iSelect did not compare all available plans, and did not necessarily recommend the most competitive plan, but rather limited the number of plans it compared based on the commercial arrangement it had with retailers. Shares in iSelect (ASX: ISU) last traded at 63 cents.

Spark New Zealand (ASX:SPK) has been fined NZ$675,000 for two historic operational and billing issues following its guilty plea last November. The New Zealand Commerce Commission brought the proceedings in the District Court in Auckland for breaches of the Fair Trading Act 1986. The breaches relate to the incorrect implementation of a ‘welcome credit’ when joining Spark for some fibre broadband customers during 2016; and a billing implementation issue relating to a 30-day notice period when customers left Spark. Spark says they have fully refunded existing customers and the vast majority of former customers. Shares in Spark New Zealand (ASX:SPK) closed 2.1 per cent higher at $3.43.

A leading provider of software for the financial services industry, Bravura (ASX:BVS) is proposing to buy tech company GBST (ASX:GBT) for $169.8 million (at a price of $2.50 per GBST share).

New Energy Solar's (ASX:NEW) investment manager, Evans Dixon has established a $200 million UK solar energy investment company.

Ramsay Health Care's (ASX:RHC) French subsidiary has completed a €625 million  rights issue to refinance its purchase of Capio AB.

OZ Minerals (ASX:OZL) has satisfied the 70 per cent earn-in on the West Musgrave Joint Venture with JV partner, Cassini Resources (ASX: CZI).

Lithium play, Orocobre (ASX:ORE) and Toyota Tsusho Corporation’s Joint Venture lithium hydroxide plant has been approved in Japan.

The Australian Government’s Foreign Investment Review Board has approved BGH's proposed acquisition of global education provider, Navitas (ASX:NVT).

Best and worst performers of the day

The best performing sector was Consumer Staples adding 1.8 per cent while the worst performing sector was Healthcare, shedding 0.4 per cent.

The best performing stock in the S&P/ASX 200 was Perpetual (ASX:PPT), rising 6.2 per cent to close at $43.19. Shares in CYBG (ASX:CYB) and Appen (ASX:APX) followed higher.

The worst performing stock in the S&P/ASX 200 was Syrah Resources (ASX:SYR),dropping 4.6 per cent to close at $1.15. Shares in Saracen Mineral Holdings (ASX:SAR) and Evolution Mining (ASX:EVN) followed lower.

Asian markets 

Mixed: Japan’s Nikkei has added 0.7 per cent, Hong Kong’s Hang Seng has lost 0.3 per cent and the Shanghai Composite has lost 0.3 per cent.

Wall Street

Wrapped up our four trading days this week mixed: The Dow Jones lost 1.1 per cent, The S&P 500 lost 0.2 per cent and the tech heavy Nasdaq gained 0.1 per cent.

Commodities and the dollar

Gold is trading at US$1,294 an ounce.
The iron ore price rose 1.1 per cent to US$95.65.
Iron ore futures are pointing to a rise 0.2 per cent.
Light crude is 86 cents lower at US$63.79 barrel.
One Australian dollar is buying 71.27 US cents.