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ASX has best one-day rally in 10 weeks

That is all from us today. Thank you for your time and your comments.

We will be back tomorrow, when first quarter inflation data will be released. Let’s see if the ASX gets to a fresh high!

Good night.

The market closed 0.9 per cent higher at 6319 today, a rise of nearly 60 points. It is the best session since 7 February and puts the index within spitting distance of a fresh ten-year high. The last ten-year high was 6352 in August 2018.

Altogether 157 of the top 200 companies closed higher today. The biggest increases are in Eclipx Group, which rose 6.6 per cent to 98 cents, and Appen Ltd, which gained 5.3 per cent to $25.

The most points were added by a 1.1 per cent rise in Commonwealth Bank shares to $74.20, a 1.2 per cent rise in Westpac to $27.16, and a 1.1 per cent rise in ANZ to $27.08. Strong gains were also made by Wesfarmers, Woolworths, Rio Tinto, Fortescue, Origin Energy, Santos, and a2 Milk Company.

Lagging today is Newcrest Mining and Telstra, which closed 0.6 per cent lower at $3.39 despite getting as high at $3.46 earlier in the day, a rise of 1.5 per cent.

The S&P/ASX 200 is still firmly higher at 6316 points, a one-day rise of 0.9 per cent.

Commonwealth Bank, Westpac, and ANZ Bank are adding the most points, with Woodside Petroleum and Wesfarmers contributing support.

There are only 49 companies in red today, with the most drag coming from Newcrest Mining, down 1.5 per cent to $24.87, and CSL, down 0.2 per cent to $190.06, which is a two-month low for the stock.

The biggest percentage rise on the broader ASX today is a 20 per cent increase in Terramin Australia stocks. But before you get too excited this represents a rise of 2 cents from 7 cents to 9 cents and is thanks to 10,000 shares trading hands. Terramin is 66.4 per cent owned by Asiapac Group and 10.6 per cent owned by Tronic Enterprise Development.

Another company at all-time highs today is market operator ASX. The stock is at $72.53, giving it a market capitalisation of $14 billion. Shares are up 21 per cent since the start of this year.

While the S&P/ASX 200 index has never climbed back to where it was before the global financial crisis hit, shares in ASX Ltd are now higher than ever. Shares reached nearly $60 before the GFC, then dropped to $24.28 in 2009.

The biggest shareholders in ASX Ltd are UniSuper, with 12 per cent, and ANZ Banking, with 11.6 per cent.

Magellan Financial Group is up 2.8 per cent today to an intra-day high of $41.96, which is an all time high for the stock.

Magellan shares are up 78 per cent since January, when it was trading below $25.

In early April Magellan told the market it had net-inflows in March of $1.17 billion, and total funds under management increased $76 billion to $79.4 billion.

Last week Macquarie Wealth Management published a note of fund managers. It found funds under management increased between 6 per cent and 10 per cent across the sector with Magellan leading the sector and Perpetual lagging. It has downgraded Perpetual to ‘underperform’ with a target price of $38, compared to today’s price of $41.05.

“ASX listed fund managers are currently trading at 15.4 times one year forward earnings, about 11 per cent below the five year average. This equates to about a 6 per cent discount to all industrials (excluding banks) versus the five year average premium of 10 per cent. We see reduced scope for further multiple expansion from current levels,” Macquarie’s team writes.

Magellan share price

Magellan share price

Resources reporter Cole Latimer has done a deep-dive on the UBS note about iron ore, and found it says the rally in the iron ore price is not sustainable. BHP shares are at the lowest price for 17 sessions today at $38.21. The rest of the market is comfortably 0.7 per cent higher today.

BHP’s shares have been rising on the back of supply shortages caused by forced mine closures in Brazil, due to a series of deadly dam failures, and Cyclone Veronica shutting down Western Australian iron ore ports. But last week rival miner Vale received the go-ahead to restart mining at its closed Brazilian Brucutu mine, bringing 30 million tonnes back into the market and lifting global supply levels. UBS analysts said iron ore prices had now likely reached a peak and were not sustainable at current levels, even if there were shortages in supply.

PhillipCapital analysts also predict a lower iron ore price. “Brucutu’s return suggests we’ve seen the worst of the supply shocks,” the analysts said. “The price of iron ore is inflated. We still see meaningful downside for commodity prices from current levels but acknowledge that tighter markets will take time to normalise.” PhillipCapital expected BHP’s share price to drop to $28 and forecast an average iron ore price of $US78 for 2019.

Read the full story here

Infant food and milk producer Bubs Australia is up nearly 10 per cent today to a one-year high of 95 cents.

Last Thursday it announced a four-year deal with Chemist Warehouse that will see Bubs product sold in all Chemist Warehouse stores and its online stores. In return Chemist Warehouse will “invest all of the marketing and promotional fees to subscribe for shares in Bubs” up to a maximum of 37 million over three years.

Read the full story at the Financial Review

The Coalition has moved to shut down further controversy over water buybacks by referring the matter to the federal Auditor-General. In a move to head off calls for a royal commission and end what has become a major campaign distraction, Agriculture Minister David Littleproud said he has asked the Auditor-General to look at all water buybacks since 2008.

This would include a single $300 million purchase by the Rudd Labor government. Mr Littleproud was confident that buybacks under Liberal and Labor governments would be given a clean bill of health by the audit. “That’s what we’re doing today. To make sure all governments of all political persuasions since 2008 have done the right thing. I’m confident that will come through,” he said.

Read the full story at the Financial Review here

Shares in Healthscope are down 0.4 per cent today to $2.45, but trading is very heavy with 11.4 million shares trading hands already. Most of the trading is going through Nomura’s institutional broker Instinet.

Last Tuesday Healthscope issued a guidance downgrade and confirmed it had lodged documents with the corporate regulator ahead of Brookfield’s proposed purchase of Healthscope. It previously said hospital earnings growth would be “at least 10 per cent” compared to 2017-18, but now says it will be between 5 per cent and 9 per cent. This means earnings of between $362 million and $376 million, compared to $345 million the previous year.

Recently Deutschebank reduced its stake in Healthscope from 15.4 per cent to 13.8 per cent, and Credit Suisse ceased being a substantial holder with the sale of 25 million shares on 11 April.

Brookfield wants to buy 100 per cent of Healthscope for $2.465 per share. The biggest shareholder is AustralianSuper with 15.8 per cent of shares.

The S&P/ASX 200 is currently 50 points higher at 6309, a rise of 0.8 per cent. Forty three stocks are down, while 153 are higher. The rest are unchanged. Traders have four days worth of news to digest, so there is a lot going on. And the domestic market is only open three days this week, so it is surprising that volumes are low at 180 million.

Stocks currently falling in this strong market include Newcrest Mining, down 1.8 per cent to $24.77, and CSL is down 0.3 per cent to $190.05. Qantas is also lower with a 1.2 per cent drop to $5.63. Even bigger falls are with Orocobre, down 3 per cent to $3.27, and HUB24 is down 3 per cent to $14.11.

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