Although the stage was set for a lacklustre open on Friday after US stocks closed mostly mildly lower, the ASX did manage to extend multi-month highs for a time before giving up those gains and ending the session in the red. The move lower for the ASX came at around the same time that US futures started to point to a weaker start in the US as traders braced for key US non-farm payrolls data. During Friday’s session in Australia, gains from Macquarie helped limit downside for the benchmark, with the investment bank touching an all-time high at one point in the session after revealing a bumper profit before ending the day up 0.2 per cent at $108.01.
The investment bank was the exception in the banking sector, however, with Commonwealth Bank shares down 1.6 per cent to $72.76, National Australia Bank shares down 1 per cent at $29.10, Westpac shares down 0.9 per cent at $29.10, and ANZ shares down 0.6 per cent at $27.55. Financials did manage to advance over the week even in the face of ongoing headwinds from the royal commission, with a 2.4 per cent uplift. Technology stocks were the best performers over the week, jumping 4.1 per cent, with Wisetech a standout. Its shares rallied 23.9 per cent to $12.28 after the company stuck to its earnings guidance but lifted its revenue target slightly.
Qantas shares flew 10.9 per cent higher to $6.31 after the airline reported a 7.5 per cent rise in third-quarter revenue to $4.25 billion and said it was on track to report record underlying profit before tax in 2017-18 of between $1.55 billion and $1.6 billion. JB Hi-Fi shares fell 7.9 per cent to $23.52 over the week, however, after the retailer trimmed its net profit forecast to $230 million from a previous forecast of $235 million to $240 million while confirming full year sales guidance of $6.85 billion. Also on the downside, InvoCare dropped 11.7 per cent to $11.60 after cutting its profit forecasts for the 2018 financial year following weaker funeral sales.
Seven West Media soared, ending the week 27.3 per cent higher at 70¢ a share. The firm’s shares surged after the Australian Competition and Consumer Commission decided not to oppose the acquisition by Seven West and Nine Entertainment of Network Ten’s stake in the TX Australia joint venture. Network Ten has vowed to appeal the ruling. In addition, Seven Group Holdings chief executive Ryan Stokes said that his firm’s interest in Seven West Media will hopefully grow, soothing worries that the Stokes family could sell out of its media interests.
Key US jobs data are due out Friday morning US time and RBC economist Tom Porcelli says the evidence continues to suggest that the US job market remains relaxed. Jobless claims came in much better than expected in the final week of April, he notes. While both ISM readings came in light of consensus on the headline for April, recent data readings have been quite volatile, he says. “There are no implications for non-farm payrolls from a slight deceleration in ISM employment. We remain at 255/250k for headline/private.”
The Reserve Bank of Australia’s Statement on Monetary Policy out on Friday contained almost no changes to the central bank’s key forecasts but did provide a few more clues on its thinking around interest rates. The statement “provided a clearer sign that the RBA has moved on from wondering if interest rates need to rise to considering when they will rise,” noted Paul Dales at Capital Economics. “But the bank also appears to be all-but ruling out a hike this year. We continue to believe that interest rates are unlikely to rise until late next year.
Oil markets on edge
Oil prices held steady on Friday after shedding earlier gains, as market jitters kicked in over the prospect of geopolitical risks from possible new US sanctions against Iran. Brent crude oil futures were at $73.64 per barrel, up 2 cents, from their last close after touching a intraday high of $73.80 per barrel earlier in the session. The fluctuations came as investors sifted through the upcoming Iran sanction decision and an increasing US crude inventory build for clues as to the likely direction of oil prices.
The Asian stockmarkets that were open on Friday traded warily as trade talks continued and ahead of the US jobs data. Hong Kong’s Hang Seng Index fell 1 per cent, South Korea’s Kospi dropped 0.8 per cent and China’s Shanghai Composite index lost 0.2 per cent. Asia markets were trading without Japanese investors on Friday, with markets in Tokyo closed for a public holiday. Trade talks aimed at easing tensions that have taken the US and China closer to a trade were ongoing on Friday, with US Treasury Secretary Steven Mnuchin sounding a positive note about progress.