Australian shares are looking to start trading in a new week, month and quarter today with a modest gain of around 18 points after Wall Street capped the first three months of the year with gains on Friday.
Eurozone shares rose 0.9% on Friday and Wall Street was up around 0.7% helped by further progress in the latest round of China-US trade negotiations, a small rise in bond yields and more signs of benign inflation in the US.
Quarterly gains for most markets offshore ranged from 34% for the Shenzhen market in China to just on 6% for the Nikkei in Japan.
Most of those gains though came in January and February – March saw a sharp slowing in momentum and Australia was no different.
Australian shares were up 9.5% in the three months (but fell 0.19% in March and 0.23% in the final week).
For Australian shares, it was the best 3 months since September quarter 2009. This though was after the huge 9% plunge in the December quarter which means the market has only gained half a percent in the past six months.
The AMP’s Chief Economist, Dr. Shane Oliver says the weak March performance saw investors get too negative and it still leaves markets below last year’s highs.
“We continue to see share markets moving higher by year-end, but expect much slower gains from here and after the huge rise since their December lows shares are vulnerable to a short term pullback particularly as global and Australian economic data remains soft,” he wrote at the weekend.
Stars of the quarter were the major iron ore miners which closed last week higher with some solid gains. BHP Group rose 2.3% to $38.49, Rio Tinto shares were up 4% to $97.91 and Fortescue Metals Group closed at $7.11, up 7.9% for the week.
For the quarter BHP shares were up 12.45%, Rio shares leapt nearly 25% and Fortescue shares were among the best performers with a gain of just on 70%.
For miners like S32, the rises were more modest – 11.3% for the quarter, but a fall of 3.7% for March. OZ Minerals did better – up 20% for the quarter and 4.7% for March. Newcrest Mining, however, saw its shares rise a modest 4.7% for the quarter and just 1.7% last month.
Lynas shares jumped 28.6% to $2.09 last week after Wesfarmers made a $1.5 billion takeover offer for the rare earths miner that was quickly rejected.
The big four banks, the markets most powerful group, had a far more modest quarter – the final report of the Hayne royal commission hit hard, with the NAB losing a CEO and chair and then Westpac losing to top executives in a major restructuring of its financial advice and consumer banking businesses. The Commonwealth delayed the spin-off of its wealth management and advice businesses.
CBA shares fell 5% in March but were still up 2.4% for the quarter, Westpac shares lost 4% for March but were up 3.5% for the first three months; NAB shares though jumped 5.5% for the quarter, but were only up 0.5% for March and the ANZ saw its shares up 6.4% for the quarter, but down more than 7% in March, thus trimming the strongest performance of a major financial group in the wake of the royal commission’s final report.
With Westpac, the ANZ and NAB all balancing their interim reporting periods on Sunday night, investor attention will now turn to those results in a month’s time. Watch for more volatility in the share prices.
AMP remains the most wounded of the big financial groups. The March quarter was bad – down 14.3% for the quarter and 12.1% for March alone.
The good news story in finance remains Macquarie – the shares gained more than 19% in the quarter, but that was in January and February because they only rose 0.15% in March, despite the company confirming forecasts for a record profit. It too ruled its books off on Sunday night – this time for the full year profit which will be released in early May.
