The Australian share market opened lower as expected, with no leads to follow as Wall Street was closed for Labor Day, but with stronger than expected Australian surplus data, we are now back in the black. Meanwhile traders are cautious ahead of the RBA’s decision on interest rates today with rates expected to hold at 1 per cent, while the Australian dollar has fallen to a new low 67.06 US cents (earlier), a level last hit almost 10.5 years ago, March 2009.
The miners are in the red, despite Nickel prices hitting five-year highs on Monday on supply shortages fears, while other industrial metals remained under pressure from the US China trade war. The nickel price surge is boding well for Independence Group (ASX:IGO) as its shares are trading at four year highs, YTD its shares are 60 per cent higher. While, the iron ore price has continued its claw back, rising 7 per cent after gaining 4 per cent in the prior session.
Gold gained on Monday after Washington began imposing 15 per cent tariffs on a variety of Chinese goods on Sunday, including footwear, smart watches and flat-panel televisions, as Beijing began imposing new duties on US crude and that saw the price weaken to a low for the week.
Looking at the chart, the S&P/ASX 200 index is 0.1 per cent or 8 points up 6,587 points with half of the sectors still the red. On the futures market the SPI is 0.2 per cent or 11 points higher.
Local economic news
Australia has reported its first surplus in goods and services in 44 years. Australia’s trade or external position was released from ABS today, known as the current account, showing Australia’s biggest surplus on record, at $19.9 billion. The latest figures also slowed a narrowing net income deficit to $13.9 billion, which added to Australia recording a $5.9 billion current account surplus for the June quarter 2019 (seasonally adjusted). Australia first positive current account deficit since 1975, as expected by the market. However, it was a massive beat compared to the expected $1.4 billion surplus that most economists expected.
Chief Economist at the ABS, Bruce Hockman says, ‘six consecutive quarters of goods and services surpluses, broadly commodity driven, have laid the foundation for our first current account surplus in 44 years’.
Retail sales meantime came out from the ABS, showing a 0.1 per cent fall in turnover in July, versus the expected 0.2 per cent gain.
Australian organic milk and baby formulae business, Bellamy's Australia (ASX:BAL) has seen increased buy-in from the big end of town with JP Morgan Chase and its affiliates increasing their stake on the company to 7.8 per cent. For FY19, its headline NPAT took a hit, falling 50 per cent on the same time last year, on declining birth rate, increased competition, plus a loss of $18 million in China label sales. Shares in Bellamy's Australia (ASX:BAL) are trading 4 per cent higher at $8.08 at noon. YTD its trading 10 per cent higher.
Oil Search (ASX:OSH) is expecting that a formal Ministerial statement on the review of the PNG LNG deal will be released later today. The future of the gas deal came into doubt after Prime Minister James Marape came to power in May, with his government promising to reap more benefits for the nation from its resources. The oil and gas exploration and development company which operates all of PNG’s oilfields, advised the PNG Cabinet (National Executive Council) met yesterday, wrapping up the review of the Papua LNG Gas Agreement. Shares in Oil Search (ASX:OSH) are trading 1.2 per cent higher at $6.62 at noon. YTD its starting 8.2 per cent lower.
Best and worst performers
The best-performing sector is S&P/ASX Industrials, adding 0.5 per cent, while the worst performing sector is S&P/ASX Communication Services, shedding 0.7 per cent.
The best performing stock in the S&P/ASX 200 is Speedcast International Limited (ASX:SDA), rising 13 per cent to $1.08, followed by shares in Western Areas Limited (ASX:WSA) and Nrw Holdings Limited (ASX:NWH).
The worst performing stock in the S&P/ASX 200 is Sigma Healthcare Limited (ASX:SIG),dropping 4.7 per cent to $0.60, followed by shares in Spark Infrastructure Group (ASX:SKI) and TPG Telecom Limited (ASX:TPM).
Japan’s Nikkei has gained 0.1 per cent, Hong Kong’s Hang Seng has slipped 0.1 per cent and the Shanghai Composite has gained 0.02 per cent.
Commodities and the dollar
Gold is trading at US$1,524 an ounce.
Iron ore price rose 7 per cent to US$90.58, extending its gain from yesterday’s 4 per cent rise to US$84.66.
Iron ore futures are pointing to a rise of 2.9 per cent.
One Australian dollar is buying 67.01 US cents