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Aussie market starts week well

Australian shares started the new trading week in a confident manner on Monday, reflecting in part a buoyant tone on Wall Street at the weekend which saw, U.S. equity markets hit record highs., says CommSec

The ASX 200 ended at session highs with a gain of 48 points or 0.7% at 6772.

· Every ASX sector closed higher, with the exception of materials, reflecting losses in the bulk miners after iron ore prices fell at the weekend, adds CommSec.

Over the course of last week, iron ore fell US$5.10 or 6%. Prices have been falling on weak demand with Chinese Steel mills reluctant to buy iron ore ahead of announcements on winter production cuts.

Winter production cuts usually extend from mid-November to mid-March as policymakers look to reduce industrial output in northern China to combat seasonally higher air pollution.

 Shares in Fortescue Metal Group (FMG) led the declines falling by 53 cents or 5.5% to $9.05. On the other side of the ledger Healthcare was the most improved ASX sector, boosted by gains in CSL shares. The blood products group was the beneficiary of a broker upgrade citing CSL’s ability to preserve margins at a time its competitors are grappling with increased costs. CSL closed at $270.56 for a gain of $9.22 or 3.5%.

· Afterpay Touch (APT) was another group benefitting from a broker upgrade – shares in the buy now –pay later provider jumped more than 4.6% to end the session with a gain of $1.23 to $28.20. Shares in APT group have surged by 128% so far this year after more than doubling in value in 2018. Elsewhere, Qantas (QAN) has pledged to reach net-zero emissions by 2050 according to media reports. QAN shares closed at $6.83 for a gain of 12 cents or 1.8% .

· Agricultural services company, Elders (ELD) highlighted the resilience of its business model in the face of difficult trading conditions as it reported a 3.7% slide in earnings to $68.9 million. The group said it’s on track to deliver 5-10% earnings before interest and tax (EBIT) growth through the agricultural cycle to 2020, despite the impact of drought on its customers. Investors were encouraged by Elders announcement of a fully franked final dividend of 9 cents per share, taking the full-year payment to 18 cents fully franked, in line with the previous year. ELD shares closed with a gain of 29 cents or 4.8 at $6.35.

· Organic infant formula maker Bubs (BUB) jumped 4.6% or 5 cents $1.12 after announcing it will sell its products in Vietnam, having struck a distribution agreement with the country’s largest Mother & Baby store chain, Bibo Mart. This in addition to a Master Distribution Agreement with one of the largest Vietnamese owned distributors in Vietnam’s infant nutrition industry, distributing to an extensive network of around 20,000 retail outlets. BUB estimates that the Vietnamese infant nutritionals market is worth A$2.2 billion annually and has been growing at a compound average growth rate of 7.7% annually over the past five years.

· Online real estate group Domain Holdings Australia (DHG) jumped by 16 cents or 5.1% to $3.287 After announcing the purchase of Bidtracker Holdings which operates the business Real Time Agent – which digitises agency agreements, auctions and contracts. DHG claimed that Real Time Agent services allow for significant efficiencies and cost reductions, in addition to improving accuracy and compliance. Real Time Agent, was founded three years ago and is used by more than 4,000 agents. The proposed transaction is $24.8 million, $19.4 million of which is payable in cash on completion. An additional amount of as much as $15.6 million in cash will be paid depending on targets being met over the next 2 years, resulting in a maximum sum of $35 million.

Looking ahead to the remainder of the week market participants will guided by a range of updates on business confidence, wages growth and un-employment numbers. In corporate terms the CBA is set to post quarterly results, Afterpay (APT), Medibank (MPL), Coles (COL) and Wesfarmers (WES) will hold AGMs and more data on China’s economy will be released on Thursday than any day this month.


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