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ASX edges higher

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Published on: Wednesday, September 21, 2016

By CommSec

  • Local shares struggled for direction in opening trade on Wednesday, emulating a similar experience in the US overnight. US share indices gave up initial gains as investors remained pre-occupied with the US Fed decision on interest rates due on Thursday morning local time. US share markets recorded modest gains overnight; weaker housing data gave investors a reason to lock in profits across home builders. The healthcare sector was the best performer up 0.4%. The S&P energy sector was the worst performer losing 0.8%. The Dow Jones index rose by almost 10 points w ith the S&P 500 index largely flat while the Nasdaq rose by 6 points or 0.1%. 
  • The ASX 200 edged higher over the course of the morning as most sectors advanced. Utilities were the most improved, supported by gains for miners and banks. At lunch the Information technology was the sole declining group. Participation saw around 1.1 billion transactions being measured by the ASX valued at $1.8 billion. At lunch, 474 shares w ere higher, 406 were lower and 350 were unchanged. 
  • Energy stocks firmed as markets debate outcomes to emerge from a key meeting of oil producers next week. Recent comments from the Algerian energy minister suggested that OPEC may hold formal talks next week as opposed to an informal session. He suggested the group is seeking ways w ith other producers to cut ~1mb/d of supply to re-balance and stabilise prices. Formalising the meeting between OPEC members and Russia from September 26-28 means a consensus decision is more likely. 
  • Miners have continued to recover from last week’s selling helped by encouraging economic news from China. The latest figures have shown that manufacturing activity, property construction volumes and new home prices have remained resilient. Additionally china’s power grid investment has surged 33% in annualised terms from January to July. 
  • BHP Billiton (BHP) announced that The Australian Tax Office is seeking $1 billion dollars in additional taxes, interest and penalties that relate to a disagreement that turns around the transfer pricing of commodities that are sold to the miner’s Singapore based entity. The miner said it will contest the bill and pursue court action if required. 
  • Shares in Kathmandu rose after reporting full year results which bettered expectations. The adventure retailer said net profit after tax (NPAT) rose by 64% to $NZ33.5 million in the year to the end of July. In the period earnings before interest and tax (EBIT) increased by 53% to NZ$50.9 million. A final dividend of NZ 8.0 cents per share will be paid, bringing the full-year payout to NZ 11.0 cents per share. KMD shares were 7% higher at $1.94. 
  • Shares in Nufarm (NUF) rose despite reporting a 36% fall in full year NPAT to $27.5 million. The result w as driven by restructuring costs and the currency losses in the group’s Latin American business. However, underlying earnings before interest and tax (EBIT) rose to $287 million, up 21% and well ahead of market expectations of $258 million. The group will pay a final dividend of $0.07 a share, up from $0.06 a year ago. NUF shares were recently at $8.81 for a gain of 5.7%. 
  • Most currencies were mixed against the Greenback overnight. The Aussie dollar touched early highs near US75.65 cents before easing to lows around US75.35 cents. The local unit ended US trade near US75.55 cents, which is where it remained in early Asian trade.

This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399, AFSL 238814 (CommSec) a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank).  The Bank and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report. This report is not a recommendation to buy, sell or hold any securities, property, real estate or financial products, and has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual.  For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual's objectives, financial or taxation situation and needs and, if necessary, seek appropriate professional advice.  Past performance is not a reliable indicator of future performance. This report is produced by Commonwealth Research based on information available at the time of publishing.  We believe that the information in this correspondence is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness.  To the extent permitted by law, neither the Bank nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report.

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