New 11.5 year high on scrapping Mexico tariffs: Aus shares 1.3% higher at noon

Market Reports

by Anna Napoli

The Australian share market opened higher and has continued to gain momentum setting a new 11.5 year high. It comes as Wall Street rejoiced with the Dow notching its sixth straight day of gains after the US reached a deal with Mexico to suspend a threatened tariff increase.

As a result of the positive sentiment, most of the sectors on the ASX are trading higher today with Healthcare up the most.

The S&P/ASX 200 index is up 81 points or 1.3 per cent to 6525 per cent higher at 6,201. On the futures market the SPI is 46 points higher.

Broker moves

Despite AGL Energy (ASX:AGL) being downgraded from a Buy to a Neutral or buy position by Goldman Sachs, Sequoia Investment Management says it's confident AGL will continue to generate strong cashflows and the investment house says it's comfortable holding AGL to gain exposure to Australian utility infrastructure. Sequoia says should the $3 billion takeover bid for Vocus (ASX:VOC) at $4.85 per share, be successful, Sequoia will revisit its investment view. Shares in AGL are down 6.5 per cent tp $19.56.

Local economic news

Business conditions fell 2 points to 1 index point in May. The fall was driven by a decline in profitability and trading sub-components. The employment index rose to 2 index points in the month, following the sharp decline last month. Business confidence rose sharply in the month to 7 index points beating expectations of a 1 point rise. NAB says confidence is unlikely to persist at these levels given the weakness in other forward-looking indicators.

Company news

The Star Entertainment Group (ASX:SGR) is down 17.1 per cent after warning of lower profits due to slowing domestic revenue growth in the second half. The company expects FY19 earnings EBITDA in the $550-$560m range ($568 million in FY2018). Shares in the Star are down 17.1 per cent to $3.74.

Real estate investment trust, Charter Hall WALE Reit (ASX:CLW) has applied to the ASX to issue 40.1 million new shares at $4.74 as part of a $190 million placement announced on 5 June 2019. The capital raised as well as the share purchase plan proceeds, will be used to partially fund the purchase of two office buildings and the recently announced 50 per cent stake in a ‘prime’ industrial property for $206 million. The new shares issued, will be eligible for the distribution, for the three months to 30 June 2019. Shares in Charter Hall WALE Reit (ASX:CLW) is down 0.1 per cent to 5.05 at noon. Year-on-year its shares are trading 19 per cent higher.

IPO's

Online small business lender, Prospa Group has floated on the ASX today the issue price is $3.78 it opened at $4.50 and is currently trading at $4.50

Best and worst performers

The best-performing sector is healthcare, adding 2.4 per cent, while the worst performing sector is utilities down 2.1 per cent.

The best performing stock in the S&P/ASX 200 is Vocus (ASX:VOC), rising 9.7 per cent to $4.20, followed by shares in Nearmap (ASX:NEA) and Costa Group (ASX:CGC).

The worst performing stock in the S&P/ASX 200 is Star (ASX: SGR),dropping 17.1 per cent to $3.74, followed by shares in AGL (ASX: GL) and Saracen Minerals (ASX:SAR).

Asian markets

Japan’s Nikkei has added 0.3 per cent, Hong Kong’s Hang Seng has gained 0.3 per cent and the Shanghai Composite has added/0.4 per cent.

Commodities and the dollar

Gold is trading at US$1,329 an ounce.
Iron ore price rose 0.9 per cent to US$101.51
Iron ore futures are pointing to a rise of 4 per cent.
One Australian dollar is buying 69.55 US cents.