ASX advances for fifth day

n shares advanced for a fifth straight session, to a fresh decade-high level, navigating a hot-and-cold confession season for the retail sector.
苏州美甲

The S&P/ASX 200 Index closed 5.4 points higher or 0.1 per cent to 6135.8 points on Tuesday. It was the smallest gain in three weeks.

Noni B became the second retailer to upgrade this year, following Lovisa’s upbeat update last week. First-half sales were up 3 per cent on a like-for-like basis; Noni B shares rose more than 4 per cent to $1.98.

Retail Food Group has downgraded again, this time forecasting first-half net profit below the $22 million level flagged on December 19. Retail Food shares fell 6 per cent to $2.32.

The PAS Group, owner of the Review, Black Pepper and JETS apparel businesses, reports soft trading conditions for the first-half, where like-for-like sales at Review and Black Pepper were below last year’s numbers. Shares of PAS fell 2.4 per cent to 40??.

Magellan Financial Group was 1.3 per cent lower to $26.46. Funds under management slipped to $57.9 billion in December, from $58.6 billion at the end of November. Platinum Asset Management rose 1.4 per cent to $7.91 after disclosing after-market on Monday that funds under management rose to $27.1 billion at the end of December, up $80 million that month.

Brambles has sold CHEP Recycled, its North American recycled whitewood pallet business, to Grey Mountain Partners for an enterprise value of $US115 million. Brambles shares were flat at $10.03.

Iron ore shipments to China from ‘s Port Hedland terminal rose 11 per cent to 39.1 million tonnes in December from 35.2 million in November, port data released on Tuesday showed.

Total December iron ore shipments from the world’s biggest export terminal for the steelmaking raw material totalled 46.2 million tonnes versus 41.3 million tonnes the previous month, according to the Pilbara Ports Authority.

Japan’s real wages posted their first gain in 11 months in November, helped by a rise in year-end bonuses. Japanese wages rose 0.1 per cent in November from a year earlier after adjustments for inflation, labour ministry data showed.

The yen jumped on Tuesday after the Bank of Japan trimmed its buying of long-dated Japanese government bonds in market operations, helping to stoke speculation about a future exit from its massive stimulus policy.

The yen rose about 0.4 per cent to 112.62 yen to the dollar, bouncing back further from its two-week low of 113.40 per dollar touched on Monday.

On Wall Street on Monday, the Dow Jones Industrial Average edged down 0.05 per cent, the S&P 500 gained 0.17 per cent, and the Nasdaq added 0.29 per cent. What moved the market:

Raise the roof

Residential building approvals surged by 11.7 per cent, significantly above market expectations which centred on a fall of 1 per cent. The n dollar was slightly higher at US78.58??. Approvals for apartment construction jumped nearly 6 per cent in Victoria and plunged in the n Capital Territory by nearly 22 per cent, the official statistics agency said. Earlier, ANZ Job Advertisements fell 2.3 per cent in December largely unwinding the increase over the previous two months, in seasonally adjusted terms. On an annual basis job ads are up 11.4 per cent, a slight moderation from 12 per cent year-on-year growth the previous month.

Faded

Gold prices inched down early on Tuesday as the US dollar held steady amid expectations of more US interest rate hikes this year. Spot gold slipped 0.3 percent to $US1,317.06 an ounce. Last week, prices touched their highest since September 15 at $US1,325.86. Investors bet on further rate hikes after Friday’s payrolls data did nothing to challenge the outlook for monetary policy tightening by the Federal Reserve. While job growth slowed more than expected, a pickup in monthly wages pointed to labour market strength. Gold is highly sensitive to rising US rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the US dollar, in which it is priced.

Bottom line

n major banks’ cost-to-income or expense ratios have been broadly steady at an average of 43 to 45 per cent over the past few years, Morgan Stanley finds. Its forecasts assume the average expense ratio falls from around 43 per cent to 41 per cent in 2019-20 and then to 40 per cent in 2021-22. In fact, although a regression analysis method suggests roughly a 5 per cent expense ratio reduction, “we believe that it will be a challenge for ‘s major banks to achieve this outcome”, the broker said, sticking to a forecast for roughly 3 per cent over five years. Hurdles to faster efficiency gains are low revenue growth, risk of new entrants via the real-time banking, open banking, and positive credit reporting channels, and increased political scrutiny.

Steel will

China’s iron ore futures rose more than 3 per cent on Tuesday to their highest in four months as investors reacted to moves by Beijing to tighten up on implementing steel production capacity cutbacks. On Monday, the world’s biggest steel producer ordered mills in environmentally sensitive regions, including its steel hub Hebei, to phase out at least 1.25 tonnes of old capacity before building one tonnes of new capacity. The most-traded iron ore futures on the Dalian Commodity Exchange were 3.1 per cent higher at 558 yuan a tonne, after touching a peak of 562.5 yuan a tonne, the highest level since September 13. Meanwhile the most-active construction steel rebar futures on the Shanghai Futures Exchange rebounded from three days of losses and rose 1.3 percent to 3,819 yuan ($587.45) a tonne.

Stock watch: MNF Group

Morgan Stanley lifted its price target on the former My Net Fone to $7.70 from $6.15. The broker has greater conviction on MNF’s ability to sustain “high teen” earnings per share growth organically over the next few years and takes an above-consensus view on the stock. Morgan Stanley also cut its earnings forecast by 3 per cent for 2018-19 to reflect investment in research and development talent, “laying the foundation to sustain 15 to 20 per cent” earnings per share growth at the expense of a near-term earnings upgrade. It raised earnings per share by 3 per cent in 2019-20. The stock is recommended “overweight” and warrants a higher market multiple because it offers earnings quality, where Morgan Stanley sees little focus from traditional telcos on voice over internet protocol and unified communications as a service.

With Reuters

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