ASX falls after choppy session


Companies in the growth sectors were among the market’s worst performers on Tuesday. Healthcare giant CSL slid 1.6 per cent to close at $193.58 while ResMed fell 2.9 per cent to $13.73 and Cochlear slid 1.8 per cent to $179.44.

Xero shares fell 1.7 per cent to $48.50, Appen closed 1.2 per cent lower at $23.49 and Altium declined 2 per cent to $33.51.

Westpac said on Tuesday it would be exiting the personal financial advice sector and that group executives George Frazis and Brad Cooper would be exiting the bank. Part of the financial advice business is being sold to Viridian with the consideration reported to be less than $50 million. Its shares fell 0.4 per cent to $26.42.

Caltex shares fell 3.5 per cent to $27.54 after announcing a challenging first quarter, marred by weak refining margins, a shutdown at its oil refinery and a dip in convenience retailing returns. The fuel refiner also noted that margins in fuels retailing had also softened due to market competition and the rapid rebound in crude oil prices.

New Hope reported a 4 per cent increase in net profits for the first half, slipping heavily from the 69 per cent growth in profit a year ago. The coal miner’s shares closed at $3.89 after falling 11.8 per cent during the session.

Iron ore miners rose on the back of a strong increase in the price of the bulk commodity after the world’s biggest iron ore producer Vale was ordered to shut down its Timbopeba mine. BHP Group rose 1.7 per cent to $37.59, Rio Tinto climbed 1.7 per cent to $94.75 and South32 advanced 0.5 per cent to $3.88.

Estia Health advanced 4.4 per cent to $2.61. The company’s chief executive officer Ian Thorley acquired 50,000 more shares in the company through on-market trade.

Stock watch

Zip Co

Morgans lifted its target price on Zip Co, and maintained its ‘add’ recommendation on the fintech company. The upgrade comes on the back of the company’s successful $43 million raising through placement to institutional and sophisticated investors which will be used to strengthen the company’s balance sheet, accelerate growth, and expand its products and market. While the broker suggested the company’s capital raising was opportunistic, it also acknowledged the need for it. “We do think Zip’s strong recent growth trends, with first half transactions up 110 per cent on the prior corresponding period, and with numerous large retailers recently joining the platform (Bunnings,
Chemist Warehouse), warrant accelerated investment,” said analyst Richard Coles. Morgans lifted its price target on Zip Co from $1.64 to $1.89.

What moved the market

BRITISH POUND

The British pound could receive a strong boost in the coming weeks although economists are expecting the biggest boost to come after March 29. An extension of Article 50 would mean Britain has more time to negotiate a deal but the European Union leaders could still block that. “Nonetheless, we think that the probability of a deal being approved by Parliament before 29th March remains only 20 per cent, compared to 45 per cent at a later date,” said Capital Economics chief markets economist John Higgins. “So in our view, while the next big rally in sterling
could conceivably occur in the coming fortnight, it is more likely to take place later in 2019 or even 2020.”

IRON ORE

Iron ore prices rose on Monday after the world’s biggest iron ore producer Vale was ordered to shut its Timbopeba mine in Minas Gerais state by Brazilian authorities over safety concerns. The mine produces 12.8 million tons of iron ore every year. Vale said on Monday that the dam at the Timbopeba mine was inspected on March 14 by experts from the national mining agency, who did not find any relevant anomaly that put its security at risk. The closure is just the latest response from the state following the deadly Brumadinho dam accident that killed more than 300 people.

AUSSIE DOLLAR

The Australian dollar retreated from a two-week high on Monday, slipping below US71¢. A weaker greenback had lifted the Aussie earlier in the day but it quickly gave up those gains on Monday night. Tuesday’s Reserve Bank March board meeting minutes we’re able to lift the Aussie, as the board members remained balanced on their outlook for the local economy. “Significant uncertainties around the forecasts remained, with scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate,” the minutes said.

RBA TENSION

Economists have noted the strong tension between employment and economic growth in the minutes from the Reserve Bank of Australia board’s March meeting. The central bank noted that “domestically, there continued to be tension between the ongoing improvement in labour market data and the apparent slowing in the momentum of output growth in the second half of 2018.” ANZ’s head of Australian economics David Plank said the RBA appeared ready to use its policy arsenal if needed. “The RBA’s apparent open mindedness on the how the employment/GDP tension is resolved suggests a willingness to act quickly if the unemployment rate starts to move higher.” ANZ is not forecasting rate cuts this year.

William is a UTS journalism graduate and has worked at The Sydney Morning Herald. He now covers markets at The Australian Financial Review and keeps a close eye on IPOs.

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