ASX inches higher in post-Christmas trade

ASX inches higher in post-Christmas trade

AFR, GENERIC, ASXAustralian Stock Exchange — ASX, shares, investing, wealth, growth, economy, business, stock market, portfolio, all ords. Monday 14th April 2003photo Louie Douvis / ldz***AFR FIRST USE ONLY***The Australian sharemarket rose by a fraction on the first trading day after Christmas, led by franchisor Retail Food Group and gold miners.
Nanjing Night Net

Energy producers lifted as the oil price neared a more than two-year high; shares of Qantas Airways fell 2.5 per cent to $5.06 on oil’s rally.

Copper rose to the highest in almost four years as Chinese officials stepped up pollution-fighting efforts by halting processing plants. On the Comex in New York, copper futures gained for a 14th day, the longest winning streak in more than a year, to post the highest closing price since January 2014. OZ Minerals added 1 per cent to $9.08.

The S&P/ASX 200 Index closed at 6,069.9 points, up 0.2 of a point and flat in percentage terms. The S&P/NZX 50 index decreased 20 points, or 0.2 per cent, to 8374.43.

Retail Food extended a three-year, $150 million debt facility provided by NAB and Westpac, due to mature in December 2018, to 2020. The under-pressure owner of Donut King and Gloria Jean’s told the market that $100 million matures in January 2020 and $50 million in December 2020. The stock advanced 9 per cent to $2.51.

Seven Group, the company behind WesTrac and Coates Hire, added 2.7 per cent to $15.61.

Microcap Pepinnini Lithium surged 32 per cent to 8.3??, triggering an ASX query. The company is awaiting sample analysis and in talks around an acquisition of mineral exploration tenure in Argentina.

Engineering group WorleyParsons expects a one-time charge of up to $60 million against its first-half profit following the reduction in the US corporate tax rate. This relates to a reduction in the group’s US deferred tax assets due to the decrease in both the US corporate tax rate and the potential loss of currently available deductions in future years, the company said.

WorleyParsons shares rose 0.6 per cent to $14.65.

Meanwhile, Oroton’s administrator has accepted a purchase proposal from its largest shareholder, a company controlled by fund manager Will Vicars, that will keep the luxury handbag retailer trading and prevent a break-up of the embattled business. The stock last traded in November.

In offshore markets, the Nasdaq Composite Index fell the most in a week on Tuesday, and the S&P 500 edged lower, with Apple and its suppliers among the worst performers on downgraded iPhone X sales estimates.

Emerging-market currencies strengthened as commodities posted the longest winning streak in more than a decade.

The major European stock exchanges were shut and markets overall were quiet as the stellar year for risk assets crawls to its end, with the possible exception of the cryptocurrency roller coaster. Next year could bring more drama, with tensions simmering between the US and Russia, Italy’s parliament set to be dissolved for a risky European election, and a big decisions on the US debt ceiling kicked down the road. What moved the market:

Slick

A pipeline blast in Libya and a bullish budget forecast in Saudi Arabia boosted crude prices to levels not seen since mid-2015. West Texas Intermediate crude neared $US60 a barrel as futures in New York and London reached the highest in more than two years. A pipeline run by Waha Oil that carries crude to Libya’s biggest export terminal exploded Tuesday, dropping the country’s output by 70,000-100,000 barrels a day. Meanwhile, Saudi Arabia is said to expect oil revenue to rise 80 percent by 2023.

Que Sera, Syrah

Syrah Resources continued its strong end-of-year run adding 1 per cent to $4.44 on Wednesday upon disclosing the first production of bagged saleable fines graphite from the Balama Project in Mozambique. That follows a sales agreement for 20,000 tonnes of natural graphite from Balama to a China-based buyer announced earlier this month. Syrah raised $110 million in September. The stock’s strong interest lately is linked to a bullish market for lithium and graphite’s application in the anode of lithium-ion batteries.

Cruising

The Australian dollar was slightly stronger, trading at US77.37??, untroubled by data that showed profit growth at Chinese industrial firms slowed in November. Industrial profits rose 14.9 percent last month from a year earlier, compared with previously reported 25.1 percent in October, the statistics bureau said on Wednesday. Robust demand and consistent factory inflation have lifted profitability this year.

Stock watch: Cochlear

Shares of Cochlear trade at a 20 per cent premium to Morningstar’s fair value estimate of $148 apiece, fetching $174.05 on Wednesday. At that level, the market is implying a five-year compound annual growth rate of 13.5 per cent on revenue, and pricing the stock at 39 times earnings. The hearing implant maker has one of the widest moats in the Australian healthcare industry, meaning the competitive landscape is favourable to Cochlear. Supporting this is the company’s strategy to engage directly with recipients. However, “we think the market is underestimating the threat of new entrants encroaching on the emerging China opportunity where government tenders have provided newcomers an entry point based on price,” Morningstar warns. Its bear case valuation is $108 a share, and bull case $187 a share.

With AAP, Bloomberg

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