Australian shares declined on Thursday as banks weighed the market down, after worries about the future direction of bond markets unsettled Wall Street.
The S&P/ASX 200 index lost 29 points, or 0.5 per cent, to trade at 6067 while the All Ordinaries lost the same amount of points to trade at 6176. The Australian dollar climbed to $78.72 after a strong retail sales print.
The 1.2 per cent jump in retail sales in November, up from a 0.5 per cent rise in October, and much higher than the 0.4 per cent increase economists had been expecting, helped several retailers to gain on Thursday.
Companies advancing after the release of the data included Super Retail Group, up 3.5 per cent at $8.77, Retail Food Group, up 3 per cent at $2.37 and Harvey Norman Holdings, up 1.4 per cent at $4.38.
Other consumer-focused companies gaining ground included supermarket giant Woolworths, up 0.4 per cent at $27.40, and Ansell, up 1.8 per cent at $8.77.
Banks were lower with Westpac trading down 0.5 per cent at $31.43, CBA down 0.4 per cent at $140.75, Macquarie Group down 0.8 per cent at $101.14, and ANZ trading lower by 0.2 per cent at $28.73.
Antipodes deputy portfolio manager Sunny Bangia said that growth is becoming elusive for the sector which has had a phenomenal run over the last seven years.
However, they are now under a bit of profit pressure, he said. “It’s become a mature cycle and they are fully priced. There could be some earnings downside,” he said.
Miners were also broadly lower, with BHP down 0.4 per cent at $30.84.
Lithium miners were notably weak, with Galaxy Resources down 10.8 per cent at $3.98 and Orocobre down 4.4 per cent at $6.78. Pilbara Minerals traded lower by 6.6 per cent at $1.14 and Mineral Resources lost 3.3 per cent to $20.51.
Other big decliners included A2 Milk, which slid 4.6 per cent to $7.01, and Blackmores, which traded down 5.4 per cent at $154.33.
Some miners gained, however, with iron ore producer South32 up 0.8 per cent at $3.72 and gold miner Newcrest Mining up 0.7 per cent at $22.81.
US markets ended lower on Wednesday, stalling the rally that marked the start of 2018, after a report that China is considering slowing its purchases of US government debt.
JB Hi-Fi was a standout on Thursday, up 4.4 per cent at $27.99 after an upgrade to overweight by Morgan Stanley’s consumer team. It was also added to Morgan Stanley’s model portfolio by its strategy team who noted that the bank’s consumer team is expecting solid trading and upside to earnings post-interim results. “We back this conviction into earnings and add JBH to our model portfolio replacing Aconex, which is now under takeover offer,” the strategists said. “Our broader view is to still caution a wholesale rotation towards consumer-facing stocks at this juncture.”
The Australian dollar jumped to a three-month peak on Thursday after a surprisingly strong reading on retail sales boosted the outlook for consumer spending and economic growth, while narrowing the odds on a rate hike this year. The Australian dollar hopped to US78.73??, from 78.42??, but again shied away from stiff chart resistance at US78.84?? and US78.98?? – a double top hit in September. The rally came after official data showed retail sales climbed 1.2 per cent in November, three times the market forecast and the biggest gain since early 2013.
Gold prices rose for a second day on Thursday, extending the gains in the previous session when prices climbed to the highest since September, as dollar weakness and a flagging rally in equities enticed investors to buy the yellow metal. Spot gold was up 41 cents at $US1,317.33 an ounce. Prices rose to as high as $1,326.56 an ounce on Wednesday, the most since September 15. Gold prices on Wednesday rose over 1 per cent as the dollar swooned after a report that Chinese officials had recommended slowing or halting purchases of US Treasury securities
Bank of Japan
The Bank of Japan maintained the amount of its bond purchases on Thursday, helping to soothe a market rattled earlier this week by a cut in its buying of longer-dated debt that fanned worries the central bank may be moving to turn off its stimulus. The BOJ maintained the size of its buying in one- to three-, three- to five-, and five- to 10-year Japanese government bonds at 250 billion yen ($2.24 billion), 300 billion yen and 410 billion yen respectively. Most market players expected the BOJ to avoid causing another shock in the market, especially after US bond markets were shaken by a report that China, the biggest foreign holder of US Treasuries, could slow or stop buying government bonds.
The US Senate’s financial services panel will hold a hearing next month with the country’s top markets regulators to discuss bitcoin amid rising concerns over the risks cryptocurrencies pose to the financial system, a person with direct knowledge of the matter told Reuters. The Senate Banking Committee will take testimony from Commodity Futures Trading Commission Chairman Christopher Giancarlo and Securities and Exchange Commission Chairman Jay Clayton in early February, the source said. Concerns about a bubble in the bitcoin market have heightened since the currency soared to record highs of more than $19,000 in December.
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