Investors poured into miners and banks on Tuesday, extending a powerful upswing and pushing the benchmark index further above its recent tight trading range.
The benchmark SP/ASX 200 Index climbed 42 points or 0.7 per cent higher to 5889, while the broader All Ordinaries lifted by a similar margin to 5958 points.
The ASX’s hot streak has now extended to eight sessions and added a total of 4.2 per cent or 238 points to the benchmark top 200 measure, marking what looks like a definitive break from five months of lacklustre sideways trade.
“We’ve definitely entered a new trading range and should be shooting through 6000 points pretty quickly,” said James Gerrish, senior investment advisor at Shaw Partners.
“After a period of consolidation, the market will tend to find a direction and stick with it and we’re seeing fund managers across the market chasing performance on Tuesday.”
The Aussie dollar was virtually unmoved following the release of the RBA’s most recent monetary policy meeting and was fetching US75.50¢ at market close.
The central bank gave no indication it was in any huirry to lift rates, despite growing market expectations of tighter policy in 2018
A strong iron ore price and a recent run of positive economic data out of China has given the big mining names a boost, with BHP Billiton and Rio Tinto closing up a further 1.3 per cent on Tuesday.
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Rio Tinto’s third-quarter production report contained mixed results: the miner exported more iron ore than expected during the September quarter, but had to downgrade its copper guidance for the second time this year.
The market’s broad positive sentiment flowed through to the big four banks, which make up more than a quarter of the ASX’s market capitalisation.
ANZ offloaded its superannuation and financial planning businesses to IOOF for $975 million; the stock closed up 0.6 per cent.
CBA closed 1.4 per cent higher, Westpac was up 0.8 per cent and National Australia Bank finished the session 0.5 per cent higher.
“For the last while we’ve seen banks and resources work in opposite directions, but the overall optimism is strong enough to drive them together now,” Mr Gerrish said.
Telstra re-confirmed its financial year 2018 guidance at its AGM on Tuesday, though this failed to materially inspire investors and the stock closed flat for the day.
Other telecommunications players enjoyed considerably better buying support however, with TPG Telecom jumping 5.1 per cent. Telstra’s management made a point of highlighting TPG as a major market competitor.
Smaller telecommunications company Vocus Group also enjoyed some buying support, surging 10.3 per cent.
Stock Watch: Challenger
Investors jumped into Challenger shares on Tuesday, which closed up 5.4 per cent to $13.19. Investors were pleased after the company announced its total group assets under management was $73.5 billion as of the end of September 2017, up 5 per cent on the previous quarter. The investment management company has a dominant market position and there are significant tailwinds supporting Challenger’s annuity business, which reported related sales (via its Life division) up 57 per cent over this time last year. Challenger’s two principal asset management businesses – Fidante Partners and Challenger Investment Partners – managed to grow funds under management 5 per cent over the quarter.
Oil prices held near their highest levels in more than two weeks after Iraqi government forces captured the major Kurdish-held oil city of Kirkuk in a response to a Kurdish independence referendum, raising worries about oil supply. As Iraqi forces advanced, Kurdish operators briefly shut some 350,000 barrels per day of oil output at two large Kirkuk fields, citing security concerns, oil ministry sources on both sides said. Crude oil was fetching $US57.83 a barrel on Tuesday afternoon, while West Texas Intermediate was trading at $US51.80.
Positive Chinese economic data is driving a rally in copper, which jumped above $US7000 a tonne this week and to a three-year high. The red metal added another 3.8 per cent in London trade on Monday night to fetch $7122 a tonne. Speculative traders poured into copper positions on Tuesday, with the active futures contract on the Shanghai Futures Exchange touching its highest level in 4 1/2 years. China’s producer prices in September rose 6.9 per cent on Monday compared with the same period a year ago, according to the government’s statistics bureau.
The weekly ANZ/Roy Morgan consumer confidence rating fell by 1.2 per cent to 112.4 after increasing 0.4 per cent in the prior week. Confidence is down 4.6 per cent over the year and below the average of 113.2 since 2014. “Record low interest rates and jobs growth are supportive of household balance sheets,” said Ryan Felsman, senior economist at CommSec. “But elevated mortgage debt levels together with recent increases in power, insurance and education-related bills are restraining consumer sentiment.”
New Zealand consumer prices
New Zealand consumer prices were higher than expected in the third quarter as housing-related costs continued to increase. The kiwi dollar rose above US72¢ for the first time since October 4 immediately before the release. The consumer price index rose 0.5 per cent in the three months ended September 30 while annual inflation was 1.9 per cent, Statistics New Zealand said. Economists had expected inflation to be 0.4 per cent in the three months ended September 30, for an annual rate of 1.8 per cent, according to the median in a poll of 13 economists surveyed by Bloomberg.