The ASX has been left lead-less for today after overnight futures trading on Friday produced a small loss of 5 points off the back of another weak end to the week by Wall Street.
The week outlook for this morning will be after Friday’s late bounce saw the ASX notch up its best week since November 2016.
The ASX 200 index rose 8.4 points, or 0.1%, on Friday to 5,849.20, taking its advance in the week to 184 points, or 3.2%.
At one stage on Friday it was down more than 0.7% but bounced in the final 45 minutes of the session.
But Wall Street left futures traders confused on Friday night thanks to confusion from the Trump administration about the state of trade talks with China, overlain with the realisation that the US Federal Reserve will boost rates a 4th time this year in December and at least three more in 2019 after the very strong jobs report for October.
250,000 jobs with wages up to an annual 3.1%, unemployment remaining at a 49 year low of 3.7% – it clear the US economy is still booming on the sugar hit from the Trump tax cuts. Corporate earnings remain solid – up 22% or so for the quarter, but major tech company reports suggest demand is weakening – as we saw with Apple’s uneasy forecast of little or no sales growth in the Christmas selling season.
Back home and last week we had confirmation the Australian economy is doing well, even if weak wage growth and high household debt remain millstones.
Exports are booming, the trade surplus is again rising, commodity prices are helping even if the long rebound in iron ore prices ended last week with a 3.6% slide late in the week.
Copper rebounded on Friday, gold fell, oil dropped, the Aussie dollar regained the 72 US cent level on Friday night, peaked at 72.55 and then closed at a month high of 71.93 US cents. This while the US dollar rose for a third week in a row.
Iron ore prices ended their recent rebound in the closing days of last week, falling 3.5% to $US73.97 on Friday after touching their highest level since may earlier in the week.
The $US76.71 hit meant the price was up more than 21% since the lows of early July. After the fall, they are still up around 18%.
The mixed messaging from the Trump administration on China saw the Aussie bounce around, but the trade data for the past three months makes it clear there has been little impact on Australian exports to China from the trade tensions, or the slowing pace of growth in the Chinese economy.
That has been all but forgotten as Australian investors have focused on banks, the final week session of the Hayne royal commission next week in Sydney and then in Melbourne the week after, falling house prices and jumped at whatever other shadow appeared unexpectedly.
A group of big names led the market higher.
CSL rebounded from a poor two months, halving the 17% slump in September and October with a very strong 8.6% gain last week. And despite weak first-quarter sales growth, Woolies shares jumped a solid 4.7% last week.
BHP’s confirmation of a massive buyback and special dividend (from the proceeds of the sale of its loss-making US onshore oil and gas assets) saw its shares close the week 7.4% higher at $33.50.
AMP rebounded from a big loss last week, closing 13% higher at $2.69 after media reports that Macquarie could pitch a bid. AMP and Macquarie shut up shop on that one.
Macquarie shares finished the week more than 10% higher a $122.42 despite that AMP rumor as it met guidance for its first-half profit and with a higher interim dividend.
The annual results of the NAB and ANZ showed the resilience of the big banks and today’s earnings report from Westpac will reinforce that reality. The banks had a solid week last week.
The big four banks all fell on Friday with losses ranging from 1.2% for ANZ to $25.53 and 0.5% for the NAB, to $25.21.
But for the week they all made solid gains – Westpac up 2%, as was the NAB, the CBA rallied strongly to be up 3.8% and the ANZ bounced 2.5%.
