Shares inched higher on Thursday, keeping intact their powerful recent winning streak as gains in the major banks offset selling in the mining sector.
The S&P/ASX 200 index rose 5 points, or 0.1 per cent, to 5896 while the All Ordinaries rose by the same margin to close the session at 5959.
"Looking at the sheer numbers of stocks hitting one-year-or-higher highs shows that this rally has more to go and is broad-based, which means it's real and sustainable into the New Year," said veteran stock broker Richard Coppleson of Bell Potter.
Jobs data released late morning by the Australian Bureau of Statistics showed unemployment ticked lower to 5.5 per cent in September, and traders pushed the Australian dollar higher in response as they bet on higher odds of a rate rise from the central bank.
But the unemployment figures also marked a turning point for the sharemarket, which lost its morning momentum that had seen the benchmark top 200 measure push above 5900 points.
Miners fell sharply in Australian trading on Thursday, with BHP down 2.2 per cent, Rio Tinto lower by 2.5 per cent and South32 dropping 2.5 per cent, as metals prices, including for copper, declined in London leading into the ASX open.
There were a slew of quarterly production reports for the sector, including from South32 which warned in its September quarter report that it may be facing cost pressures from rising raw material input costs and a weaker US dollar.
Buying in most of the major banks helped offset selling in the materials sector, which has up until recently helped power the month's strong sharemarket gains. CBA rose 0.5 per cent, Westpac was higher by 0.6 per cent and ANZ advanced 0.8 per cent. NAB ended the session flat.
A handful of energy companies also released updates on Thursday, with Woodside down 1.8 per cent after it trimmed the upper end of its production forecast for 2017 due to the late start up of the giant Wheatsone LNG project in Western Australia.
Meanwhile, Santos rose 1.2 per cent after better than expected sales during the September quarter allowed the firm to deliver small upgrades to its full-year production and sales forecasts. Chief executive Kevin Gallagher promised the company would continue to work to help solve the east coast gas crisis.
Healthscope shares rose 2.7 per cent after boss Gordon Ballantyne reaffirmed prior guidance that 2018 operating earnings for its main hospitals division will be flat and in line with fiscal 2017.
Dealmaking was also on the agenda on Thursday, with Domino's Pizza Enterprises up 3.5 per cent after it said it will spend up to $63 million to buy Germany's Hallo Pizza chain, taking its store numbers in Europe's biggest economy to over 300.
The performance for Australia followed a mildly positive session on Wall Street overnight, which was nevertheless enough to push the Dow Jones Industrial Average to its first ever close above 23,000 points.
After shooting higher this year, analysts are now wondering whether the US stockmarket can maintain its momentum into what is traditionally a favourable period for investors.
"When the equity market is up the first nine months of the year, there is a better than random chance that share prices post further gains in the final quarter of the year," Citi US analysts said.
Stockwatch
Bellamy's Australia
Comeback kid Bellamy's Australia's astonishing share price run has further to go, with the company's turnaround happening faster than expected, Citi analysts told clients Thursday. The broker upgraded its target price for the stock to $14.40 a share from $7.90, and upgraded the stock to "buy" from "sell". "Given the turnaround progress, we consider many of the reasons to sell the stock as becoming stale, such as i) brand damage, ii) excess inventory, iii) CNCA licence issues, iv) balance sheet," Citi told clients. "Further, the recent approval of five new Australian CNCA licences should ease concerns that foreign brands could be pushed out of China over time." The analysts upgraded Bellamy's earnings forecasts by up to 25 per cent over the next three years. Shares rose 7 per cent to $12.20 on Thursday.
Movers
ASX to 6000?
While still lagging global peers, the ASX 200 in the last quarter of the year is playing "a catch-up trade" and "now looks to be making a run at the 6000 level that has proved elusive over the last decade," wrote Morgan Stanley strategists. The benchmark measure is up 3.7 per cent, including dividends, so far this month. But can it reach that elusive round number? The broker's team is not so sure. "While the index may well push toward this headline, we think to hold these levels and make further gains, a sustained earnings upgrade cycle from the real economy (that is, industrials ex-financials) will be needed, rather than further multiple expansion," they wrote.
Aussie ping pong
The Aussie reacted positively to September jobs data on Thursday, ticking higher by a fifth of a US cent to fetch US78.6 cents after the figures were released. The unemployment rate inched lower to 5.5 per cent, against a consensus forecast of 5.6 per cent. There were an additional 19,800 jobs added over the month, ahead of expectations for 15,000. There were 6100 more full-time roles and 13,700 part-time. Still, CBA economist Michael Workman noted that the missing ingredient of the employment cake is higher wages. "Muted wages growth means that the RBA is, in our view, unlikely to consider lifting the cash rate till late next year," he said.
China GDP
China's economic growth slowed slightly, as expected, in the third quarter as the government's efforts to rein in the property market and debt risks tempered activity in the world's second-largest economy. The economy grew 6.8 per cent in the third quarter from a year earlier, in line with the estimate produced by a Reuters poll and down from 6.9 per cent in the second quarter, the National Bureau of Statistics said on Thursday. Analysts had penciled in a gradual GDP slowdown due to an expected softening in property investment and construction as more cities try to cool surging housing prices, while a government campaign against riskier lending pushes up borrowing costs.
Crown Resorts
Yesterday's parliamentary stand by independent lawmaker Andrew Wilkie, in which he outlined some serious accusations against Crown Resorts, was "political fanfare" as opposed to an argument for a new casino regulations bill, Credit Suisse analysts said. The analysts point out that such matters are licensed and regulated by state, not federal, governments. The Credit Suisse team reckon the risks to investors from the allegations, which included tampering with slot machines, are "very low". The analysts do, however, say the allegations that Crown staff were instructed to use different player ID cards when processing transactions above $10,000 to avoid money laundering oversight was "noteworthy". If this allegation had merit it could potentially trigger an inquiry by AUSTRAC, the analysts say. Crown shares fell 2.9 per cent.
