Australian shares snapped a five-session streak of gains on Wednesday as investors paused after pushing shares to decade highs in recent sessions.
The S&P/ASX 200 index lost 39 points, or 0.6 per cent, to 6096 while the All Ordinaries slid 35 points, or 0.6 per cent, to stand at 6205. The Australian dollar reached US78.23c.
The ASX gained steadily in the first sessions of 2018 and, after factoring in Wednesday’s decline, is still 0.5 per cent above where it started the year and remains near decade highs.
On Wednesday, the market initially appeared set to extend its recent gains to six sessions, with the benchmark rising in the morning after a positive session on Wall Street where the Dow Jones reset a record high and the S&P 500 advanced for a sixth day, for its best start to a year in more than a decade.
Banks gained on Wall Street after US 10-year Treasury yields broke through 2.5 per cent and Australian banks and healthcare stocks led the market higher early. However, gains soon gave way to losses and the market fell into the red, weighed down by losses for materials, industrials, telecoms and financials.
Sydney Airport slid 2.1 per cent to $6.93 and toll road operator Transurban fell 2.7 per cent to $11.97 in the industrials sector, telecom giant Telstra declined 1.1 per cent to $3.71 and gold miner Newcrest Mining dropped 2.3 per cent to $22.65.
On the upside, Platinum Asset Management jumped 4.6 per cent to $8.27 after an upgrade to equalweight from underweight at Morgan Stanley.
Platinum Asset Management reported aftermarket on Monday that its funds under management rose to $27.1 billion at the end of December, up $80 million that month. Morgan Stanley said it believed Platinum’s inflow turnaround would be “sustainable.”
The gains spread beyond Platinum, with Magellan Financial advancing 4.7 per cent to $27.70, more than taking back a 1.3 per cent decline made in the previous session.
Meanwhile, JPMorgan weighed into the energy sector, downgrading Woodside to underweight and cutting Origin Energy and Senex to neutral.
Woodside lost 0.5 per cent to trade at $34.47, Origin shares were down 2.3 per cent at $9.53 and Senex declined 1.3 per cent to 39 cents.
Syrah Resources fell 5 per cent to $4.53 after the heavily-shorted graphite miner hit a speed bump in its plans to develop a beneficiation plant in Louisiana that would give it better access to lucrative battery markets. Stockwatch
Vita Group jumped 13.8 per cent to $1.82 after the communications equipment firm raised its earnings guidance. Earnings before interest, tax, depreciation and amortisation are expected at $20 million for the six months to December 31, up from a previous range of between $16 million and $18 million. The firm also raised the lower limit of its fiscal-year to June 30 forecast range, to a range of $38 million to 43 million from a prior forecast range of between $36 million and $43 million Vita said that the improved forecast reflects continued focus on cost control, coupled with robust Christmas trading in its retail channel after allocations of iPhone 8 and X inventory were relaxed more quickly than anticipated.
The Australian dollar traded at US78.24??, retreating from last week’s US78.84?? high. CBA foreign exchange strategists said that the most recent bout of weakness for the Australian dollar can be explained by gains in the US dollar. The greenback strengthened after US 10-year Treasury yields climbed to a near 10-month high of 2.54 per cent on Tuesday The rise in yields came amid an increase in US bond pricing of US inflation expectations and speculation that the Bank of Japan is scaling back monetary policy stimulus, the CBA strategists wrote. They’re expecting the Australian dollar to trade nearer to US80?? by March against the US dollar.
China’s factory inflation slid to the lowest level since November 2016 last month amid slowing output and higher year-ago base comparisons, Bloomberg reports. The producer price index rose 4.9 per cent in December from a year earlier, versus a projected 4.8 per cent rise in a Bloomberg survey and 5.8 per cent in November. The consumer price index climbed 1.8 per cent, the statistics bureau said on Wednesday, compared with a median forecast of 1.9 per cent. Easing factory prices could reduce the incentive for the People’s Bank of China to raise borrowing costs, a move that would alleviate pressures on the bond market amid efforts to curb the pace of debt growth.
The number of job vacancies in Australia climbed in the three months to November, dominated by opportunities in the private sector. Employers were seeking to fill 210,300 positions, up 2.7 per cent from the three months to August, in seasonally adjusted terms, the Australian Bureau of Statistics said. Job vacancies in the private sector rose a seasonally adjusted 3.8 per cent from August, to 192,000, led by retail trade, mining, manufacturing and administration and support services.
Oil popped after an industry report showed the biggest draw in US crude stockpiles for this time of year since 1999. Futures climbed from the highest level in more than three years after the American Petroleum Institute was said to have reported domestic oil inventories tumbled by 11.2 million barrels last week. The rise came after an already bullish day for West Texas Intermediate, the US benchmark oil price. WTI futures were at $US63.47 a barrel while Brent crude futures traded at $US69.18 in late trading.
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