The major banks led the gains on the market on Wednesday. Commonwealth Bank rose 0.7 per cent to $70.75, ANZ advanced 0.1 per cent to $25.68, NAB closed 0.2 per cent higher at $24.63 and Westpac shares climbed 0.2 per cent to $25.90.
Seven West Media announced it had finalised the sale of its 50 per cent interest in Yahoo7 to Verizon Media. The company will receive $20.75 million in cash for the sale this financial year. The company’s shares rose 6.2 per cent to 51.5¢.
GWA Group announced it has completed the takeover of New Zealand-listed Methven Limited. GWA, through a wholly owned subsidiary, now owns all shares in Methven with shareholders set to be paid $NZ1.60 cash per share. GWA’s shares rose 3.1 per cent to $3.32.
Gold miners also moved higher as falls in European and US equities increased safe-haven demand for precious metals. Northern Star Resources rose 2.7 per cent to $9.29, St Barbara climbed 1.8 per cent to $3.36, Evolution Mining lifted 1.4 per cent to $3.73 and Newcrest Mining advanced 1.5 per cent to $25.57.
Resources stocks fell on Wednesday after oil and iron ore prices reversed their gains from the previous day. The International Monetary Fund downgraded its forecasts for the global economy, saying GDP growth would be 3.3 per cent in 2019, down from the 3.5 per cent estimate made in January.
BHP Group fell 0.4 per cent to $39.89 and Fortescue Metals Group slid 0.4 per cent to $8.17.
Woodside Petroleum fell 1 per cent to $35.15, Origin Energy slid 1.1 per cent to $7.23, Oil Search closed 1.1 per cent lower at $8.06, Santos declined 0.4 per cent to $6.99 and WorleyParsons closed at $14.64, down 2.1 per cent.
South32 shares extended their losses from the previous session, falling 1.9 per cent to $3.70 and Alumina declined 2.4 per cent to $2.49.
Crown Resorts was among the market’s worst performers after Wynn Resorts shut down takeover talks with the local casino operator.
The US-based company blamed the walk out on “the premature disclosure of preliminary discussions” after Crown was forced to issue a statement to shareholders following a report by Street Talk that negotiations between the two companies had taken place. Crown’s shares fell 9.1 per cent to $12.77. Star Entertainment Group, whose shares also rose on Tuesday on the takeover news, fell 1.5 per cent to $4.40.
Canaccord Genuity has initiated coverage on Nickel Mines with a ‘buy’ rating and a target price more than double its current price. The broker said Nickel Mines was superior to its other ASX-listed peers due to its high-grade nickel, long mine life, cost advantages and tangible scale upsides. “With Indonesia expected to be the epicentre of emerging supply to the 2.2mtpa nickel market, Nickel Mines provides direct exposure to bottom-cost quartile nickel production and superior leverage to a market that we view as entering a period of undersupply and the most favourable pricing outlook of our base metals coverage,” said analyst Larry Hill. Canaccord Genuity gave Nickel Mines a price target of 90¢, at a 120 per cent premium to its Tuesday closing price of 41¢.
What moved the market
Capital Economics is forecasting the Reserve Bank of Australia will cut the official cash rate three times before 2020. Its forecast is predicated on house prices continuing to fall, slowing consumption growth and poor GDP growth. “We now expect the RBA to cut rates to 0.75 per cent by the middle of next year, with the first cut happening as soon as August,” said senior economist Marcel Thieliant. “That view is more dovish than anticipated by financial markets. The Reserve Bank of New Zealand adopted an explicit easing bias at its March meeting and we think it will start cutting rates in May. Our forecast is that rates will fall to 1.25 per cent by year-end, which is broadly in line with current market pricing.”
Iron ore ended a seven-day rally on Tuesday as the price of the bulk metal fell below $US95 a tonne. Weaker buying demand from Chinese steel makers was cited as the reason behind the fall. “End users have flagged that they prefer to replenish their iron ore stocks by buying from port stockpiles,” said CBA mining and commodities analyst Vivek Dhar. “Port stockpiles are not only cheaper than buying from the seaborne market, but are available immediately. As seaborne markets feel the tightness of lower cargoes from Australian miners and Vale, we anticipate China’s port stockpiles to continue to weaken.”
The Japanese yen benefited from some safe-haven demand on Tuesday as global growth concerns were reignited across various markets. The International Monetary Fund downgraded its 2019 global GDP forecasts from 3.5 per cent to 3.3 per cent, sparking a response from the market as US and European equities fell while the US 10-year Treasury yield fell by 2.2 basis points. The yen has had a strong start to the week’s trading, climbing as much as 0.7 per cent in the past three days.
Consumers have responded positively to the federal budget, according to Westpac’s latest consumer sentiment survey. The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.9 per cent to 100.7 in April, from 98.8 in March. “While the month to month rise in sentiment is fairly muted, the survey detail suggests the Budget was well-received,” said Westpac chief economist Bill Evans. “Sentiment over the course of the week showed a clear boost, with sentiment amongst those surveyed post-budget 7.7 per cent higher than sentiment amongst those surveyed pre-budget – the most positive turnaround since we began tracking pre-and-post budget responses in 2011.”
William McInnes covers markets from Sydney including editing the Markets Live blog.