ASX rises as China data allays slowdown fears


“A global growth recovery is far from being priced in and continues to be at the epicentre of discussion as the debates around the likelihood, timing and magnitude have intensified immensely.”

The major iron ore miners rose on Monday, buoyed by the prospect that an increase in China manufacturing would boost demand for the bulk metal. BHP Group rose 1.5 per cent to $39.05, Rio Tinto climbed 1.7 per cent to $99.53 and Fortescue Metals Group advanced 4.5 per cent to $7.43.

Woolworths announced it would shut 30 Big W stores and book $370 million in one-off costs this year as a result. The retailing giant also announced a $1.7 billion off-market share buy-back after completing the sale of its fuel retailing business to EG Group. Its shares rose 2.2 per cent to $31.08.

Macquarie Group shares closed only marginally higher at $130.62, however, the 0.9 per cent advance was enough to lift the investment bank to an all-time high.

The four majors were also slightly stronger on Monday although their gains were only mild. Commonwealth Bank rose 1 per cent to $71.36, Westpac climbed 1 per cent to $26.18, ANZ closed 0.9 per cent higher at $26.27 and NAB advanced 0.3 per cent to $25.35.

Eclipx Group shares rose 16.4 per cent to 75¢. UBS reinstated a rating on the embattled company, listing it as a ‘buy’ and giving it a price target of $1, at a 56.3 per cent premium to its Friday closing price of 64¢.

Telstra shares closed 0.6 per cent lower at $3.30 on Monday. The Australian Financial Review reported the City of Melbourne’s attempt to take Telstra and JCDecaux to a tribunal to stop further installation of large advertising panels with payphones was being closed watched by the City of Sydney, with both councils potentially looking to halt the telco’s rollout of the new payphones.

Pilbara Minerals shares fell 6.3 to 74¢, reversing some of its gains from last week. In a note on Monday, JP Morgan analyst Mathew Hocking downgraded the company from ‘neutral’ to ‘underweight’ and reduced his target price on the company from 85¢ to 70¢.

The more defensive REITs and infrastructure stocks were also weaker on Monday. Sydney Airport slid 1.8 per cent to $7.30, Goodman Group fell 1.3 per cent to $13.18 and Scentre Group closed 1.2 per cent lower at $4.06,

Stock watch

BINGO INDUSTRIES

UBS retained its ‘buy’ rating on Bingo Industries but reduced its price target on the waste management companies, citing the broker’s conservative residential housing outlook. The broker’s review of the company came on the back of its acquisition of Dial A Dump Industries. Analyst Tim Plumbe said he expected residential construction volumes to deteriorate by 23 per cent. The broker did acknowledged infrastructure projects could provide some offset but still downgraded its earnings per share forecasts for Bingo for the next three fiscal years by 7, 29 and 28 per cent respectively. The broker also acknowledged its conservative forecasts mean risks were skewed to the upside. UBS reduced its price target on Bingo Industries from $2.55 to $2, still at a 30.7 per cent premium to its Friday closing price of $1.53.

What moved the market

COMMODITY PRICES

Commodity prices broadly finished lower in March, largely driven by commodity specific supply factors. The restart of Chinese coal mines in the province of Shaanxi and reports that Dalian customs had coal imports from Australia, saw the price of Australian thermal coal fall through March. Iron ore tracked sideways for most of March, but lifted slightly towards the end of the month as Brazilian miner Vale cut its iron ore production guidance. Oil prices were also slightly stronger for the month, driven largely by reports Russia was well on track to achieve its production cut obligations under an OPEC-led supply deal.

ZINC

Zinc soared to a nine-month high on Friday as mine disruptions, low stocks and optimism over a US-China trade deal lifted the base metal by 2.4 per cent. US Treasury Secretary Steven Mnuchin described talks with China in Beijing last week as “constructive”. Zinc stocks have also been falling, down 20 per cent in the last month alone, with inventories now critically low and at levels not seen since 1998. The base metal is largely sed as an anti-corrosion agent, used to galvanise iron or steal products.

BRITISH POUND

Brexit developments remain the key focus for the British pound this week as the United Kingdom enters its final two weeks before the renewed April 12 deadline. The odds of a no-deal Brexit continue to rise and analysts say it should not be discounted. Germany and Ireland are discussing border production plans in the event of a no-deal. The UK House of Commons’ further round of voting on alternative Brexit plans on Monday could set the tone for the next two weeks.

CHINA DATA

Upbeat Chinese manufacturing data released over the weekend was better than expected, at least temporarily allaying fears that a slowdown in China was underway. The official China Manufacturing PMI rose to 50.5, exceeding the expected 49.5, while non-manufacturing advanced to 54.8 versus the expected 54.0 print. However, the key battleground for China remains the negotiations with the US, with talks set to head to Washington this week following last week’s discussions in Beijing. A number of data releases are due this week, set to give investors a stronger insight into global economic health.

William McInnes covers markets from Sydney including editing the Markets Live blog.

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