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Retreat on the ASX

The ASX 200 gave up a sizeable portion of its early improvement over the course of Monday afternoon, records CommSec.

“After an opening push higher that had the Index ahead by 44 points at the best levels of the morning, the buying momentum faded and the Index ended with a gain of 18 points or 0.3 per cent.

“At the close of trade 2.73 billion shares had been traded worth $6.01 billion. 631 stocks rose, 526 fell and 374 were unchanged.

 “Sector performances remained faithful to the trends seen earlier in the day, Materials, and Energy names led the gains , although Technology surrendered early advances. Bank losses remained a deterrent to further gains, while Property Trusts and Utilities remained shunned by participants

 “The Consumer facing sectors were weighed down by weaker than expected retail sales numbers for the month of September. Retail trade rose by 0.2 per cent during the month after a 0.4 per cent increase in August, although the result was well below economist’s forecasts, which had tipped a 0.4 per cent lift in sales.”

Over the year, in inflation adjusted terms, retail trade declined by 0.2 per cent – the biggest fall in 28 years. In other news, ANZ job advertisements series fell by 1.0 per cent in October after rising by 0.3 per cent in September. Ads were down by 11.4 per cent over the year to 155,972. Shares in Harvey Norman (HVN) were up 8 cents or 2% to the better at $4.15, JB Hi Fi (JBH) was 80 cents or 2.2% easier at $35.83, while Kogan.com (KGN) was 25 cents or 3.6% higher at $7.04

· The Materials sub-index ended around the best levels of the session, despite a retreat in iron ore futures in Asian trade. Rather, investors continued to take heart from encouraging economic news from China. The Caixin Markit manufacturing PMI unexpectedly rose in October, from 51.4 in September to 51.7 in October - well above forecasts of 51.0 (a reading above 50 indicates an expansion) The figure provided some hope that China’s commodity demand may accelerate in coming months if infrastructure investment gathers momentum. Fortescue Metals Group (FMG) shares were up 38 cents or 4.2 per cent at $9.380. Elsewhere, shares in W.A based nickel miner, Panoramic Resources (PAN) soared 27% or 9 cents to 42.5 cents following a takeover offer from Independence Group (IGO). The offer values PAN at approximately $312 million with 1 IGO share offered for every 13 PAN shares

. · Financials cast a pall over the market with all of the big banks ending lower, led by the NAB (NAB) whose shares fell 72 cents or 2.5% to $27.69 as investors consider the prospects that it will be the next lender to pursue a capital raising. The catalyst for bank weakness was Westpac’s (WBC) full year results. The lender reported that statutory net profit fell 16% to $6,784 million, while cash earnings fell 15% to $6,849 million. WBC highlighted that the result was driven by ‘customer remediation costs and the reset of our Wealth business. Excluding these notable items, cash earnings were down 4% on FY18’. WBC said it would cut its final dividend by 15% from 94 cents per share to a fully franked dividend of 80 cents per share. Westpac shares were in a trading halt after announcing a capital raising, which will comprise a fully underwritten $2 billion institutional share placement and a non-underwritten share purchase plan which will seek to raise approximately $500 million.

 · Healthcare posted solid gains as a sector, despite mixed performances for leading names; Resmed (RMD) shares were at $21.45 for a loss of 0.4% or 9 cents, while Cochlear (COH) was 31 cents or 0.1% lower at $213.62. Drug developer, Bionomics Limited (BNO), was ahead by 2 cents or 22% to 11.5 cents after announcing it had been granted ‘Fast Track’ designation by the U.S. Food and Drug Administration (FDA) for its BNC210 treatment for the treatment of Post-Traumatic Stress Disorder (PTSD) and other trauma-related disorders. Fast Track designation is an FDA programme intended to facilitate and expedite development and review of new drugs to address unmet medical need in the treatment of a serious or life- threatening conditions

. · The AUD/USD consolidated around session highs in the afternoon as concerns around global growth dissipated. The solid tone for the local unit reflected the market currently pricing a 95% chance that the RBA will maintain the cash rate at its current rate of 0.75% at Tuesday’s policy setting meeting ahead of the Melbourne Cup.

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