Banks Headline Post Election Sugar Hit

By Glenn Dyer | More Articles by Glenn Dyer

Markets in Asia, starting with the ASX will be trading blind for the next two days with the Memorial Day holiday tonight in the US disrupting trading.

UK markets will also be on holiday tonight as well.

Our market will be starting flat to slightly negative after trading on Wall Street ended in the green, but the gains were sharply lower than during the session.

Worries about the China-US trade brawl, Brexit and Mrs. May’s departure as UK Prime Minister, concerns about the health of various economies saw a restrained end to trading

Friday saw Eurozone shares rise 0.6% on Friday and the US S&P 500 ended up 0.1%, after giving up an early gain of 0.7%.

The softish US lead saw ASX 200 futures fall 2 points pointing to a flat start for the Australian share market today.

Demand for safe havens pushed bond yields lower and gold higher. With the Reserve Bank all but confirming a rate cut for its board meeting tomorrow week, bond yields fell – Australian 10-year bond yields to a new record low of 1.52%.

The RBA will cut its cash rate at its June meeting on Tuesday week, and a move by APRA to change a key prudential rule on home lending also played a major part in boosting the prices of banks, buildings and retailers higher.

Oil and metal prices fell on concerns about global demand, but the iron ore price continued to rise, returning to above $US105 a tonne.

Friday saw the ASX end the week higher, despite easing from its post-election 11-year high.

The ASX 200 Index rose 90.7 points, or 1.4%, to 6,456 by the close Friday ( it lost 0.6% on Friday), while the broader All Ordinaries Index added 85.4 points, or 1.3%, to close at 6,545.6.

The big four banks led the market gains, rallying on the back of the election result before adding to those gains after APRA planned to scrap a key home loan rule, which will allow the banks to lend more money to home buyers.

Westpac closed the week 10.7% higher at $28.12, Commonwealth Bank added 7.3% to end at $78.18, ANZ rose 7.7% to $27.84 and NAB was up 7.9% to $25.81.

Private health insurers also benefited from the election result. Medibank Private jumped 12.2% to $3.23, NIB Holdings added 14.1% higher at $6.72 and Ramsay Health Care was up 8.3% to $70.25.

Companies exposed to the building sector also benefited despite data from the Australian Bureau of Statistics showing the value of construction work done fell for the third quarter in a row in the three months to March.

Building products producer CSR surged 20% to end the week’s trade at $4.14, Boral climbed 11.5% to $5.23, GWA Group jumped 15.8% to $3.60, Adelaide Brighton closed 13.4% higher at $4.24 and developer Stockland rose 13.2% to $4.45.

Retailers also did well from the election result. Super Retail Group climbed 13% to $9.23, JB Hi-Fi added 8.7% to close at $27.81 and Harvey Norman rose 9.4% to $4.19. But shares in the Reject Shop fell more than 7% to $2.11 after springing a surprise downgrade and departure of the CEO.

Falling oil prices pushed energy shares lower – Woodside Petroleum fell 4% to $35.70, Origin Energy lost 4.8% to $7.51 and Santos dropped 4.3% to $6.98.

Shares in the big miners were mixed to lower – BHP shares fell 2.6% to $37.45, Rio Tinto shares lost 0.1% to $101.25 and Fortescue Metals shares dropped 8.1% to $8.22 after going ex-the special 60 cent dividend announced before the election.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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