Banks lift ASX to another high

The Australian sharemarket defied weak offshore leads and falling iron ore prices to push higher again on Tuesday, with strength in the major banks helping keep the benchmark index at its highest level since early 2015.


The S&P/ASX 200 rose 0.3 per cent to 5929.3, while the broader All Ordinaries Index added 0.3 per cent to 5964.6.

“The highlight was a bit of support for the banks, which have been toing and froing between believers and disbelievers for a while,” said Paterson’s Securities economist Tony Farnham.

The big four banks rose between 0.4 and 0.7 per cent, with the exception of Westpac, which soared 1.2 per cent. With all other sectors trading in the red or narrowly in the black, the financials sector as a whole made up almost all the index’s upward movement, rising 0.8 per cent as a whole.

Meanwhile, the materials sector was the major drag on the market, largely due to BHP Billiton giving up some of yesterday’s outsized gains. On Monday, BHP shares soared 4.6 per cent to their highest levels in two years after a hedge fund that owns 4.1 per cent of the company’s London-listed stock urged the board to separate its petroleum arm and collapse its dual listing.

On Tuesday, BHP shed 1.2 per cent, which Mr Farnham put down to “a bit of profit-taking after the run-up yesterday”.

Rio Tinto, however, closed up 2.0 per cent. Fortescue Metals dipped 1.5 per cent. Most gold miners were up, though Saracen Mineral Holdings plunged 4.2 per cent after informing the market its March quarter gold production fell short of guidance due to heavy rainfall.

Shares in Asaleo Care plunged 8.4 per cent, their biggest fall in 9 months, after a Credit Suisse note cut the toiletries manufacturer to ‘neutral’.

Ardent Leisure also had a bad day, down 1.0 per cent, after it revealed on Monday a 34.3 per cent fall in revenue at its parks due to the impact of Cyclone Debbie. UBS downgraded the stock on Tuesday, which may have played into its fall. ???

Woolworths was 0.7 per cent lower after news broke of a $100 million class action being brought against it by Maurice Blackburn over its shock 2015 profit downgrade. Wesfarmers was also dragged lower, closing down 0.3 per cent.

While market turnover was “reasonable” on Tuesday, “you’d expect to see it thinning out towards the end of the week because of the Easter holidays”.

Stock watch: Costa Group

Shares in horticultural company Costa Group hit an all-time high on Tuesday, soaring 7.1 per cent to $4.69, after Goldman Sachs lifted its price target for the stock. Goldman reiterated its ‘buy’ rating and raised its price target by 27 per cent to $5.10, saying Costa’s move into the avocado market last year and the positive outlook for blackberries will lift earnings. “The avocado market has experienced robust growth over the past decade. We expect steady volume and value growth driven by increased consumption and potential expansion into the export markets over the medium term,” the analysts write. Three analysts have a ‘buy’ rating on the stock and one a ‘hold’, with an average price target of $4.44, according to Bloomberg. Market movers

Coking Coal

Premium coking coal prices surged above $US300 a tonne as the damage from Cyclone Debbie continued to sideline Queensland coking coal exports. Aurizon’s share price surged 3.6 per cent on Tuesday as the first shipment of coal reached Gladstone port via Aurizon’s Blackwater rail line, which transports 15???20 per cent of cross border coking coal. But other lines remain damaged. Aurizon estimates it will take another four weeks to repair its Goonyella rail line, which transports 35???40 per cent of global coking coal exports.

Iron ore

Iron ore’s descent into bear-market territory may herald further weakness. Barclays pinned the blame for the slide on lower steel demand in China driving a shift from mills toward lower-quality ore, and raised the prospect of a drop into the $US50s. Ore with 62 per cent content in Qingdao fell 1 per cent to $US74.71 a tonne overnight, following a 6.8 per cent drop on Friday that pushed the commodity into a bear market from a February peak. Iron ore futures in Dalian are trading flat at 523 yuan


Short Aussie against the Loonie: that’s the way currency traders are playing the contrasting fortunes of two key commodities – iron ore and oil. While the price of the latter, Canada’s main export, has been boosted by Middle Eastern tensions, iron ore has dropped into a bear market. The Australian dollar dropped below parity against the Canadian dollar on Monday night for the first time in two months, and was fetching 99.95 Canadian cents. in late trade on Tuesday, having declined 2.2 per cent in the past two weeks.

NAB survey

Business conditions jumped in March to highs not seen since before the global financial crisis with sales, profits and employment all at levels that bode well for a pick up in economic growth in coming months. NAB’s monthly survey of more than 400 firms showed its index of business conditions climbed 6 points to +14 in March, well above the long-run average of +5. The survey’s measure of business confidence, however, dipped a point to +6 which was in line with its long-run average. The major services sectors and wholesale reported the strongest conditions.