Australian shares climbed solidly on Monday to start the week on an upbeat note, with Commonwealth Bank investors taking the news of a new CEO in their stride.
The S&P/ASX 200 index rose 25 points, or 0.4 per cent, to 6075 while the All Ordinaries climbed 22 points, or 0.4 per cent, to 6187. Currency traders continued to buy the Australian dollar, which traded at US80.96c late Monday as it continued to hover around multi-month highs against the greenback.
While the US dollar has suffered, US equities continue to power ahead and the ASX started the day on a positive note following a solid session on Wall Street on Friday, where strong earnings outflanked concerns about trade spurred by President Trump's administration officials.
Some strategists are finding reasons to be positive on the ASX over the longer term as well, with Citi's Australian equity strategist Tony Brennan lifting his ASX target 6600 by the end of the year, up from a previous target of 6400.
"Commodity prices have continued to rise, and with the extra gains just this year-to-date and earnings forecasts for resources companies yet to fully incorporate them, we estimate a further 5-10 per cent upside to the market's earnings over 2018," Mr Brennan commented.
Miners were moving broadly higher on Monday, with South32 up 3.7 per cent at $3.97 and Orocobre up 5.7 per cent to $7.28.
Iluka Resources jumped 4.9 per cent to $10.17 after the world's largest zircon producer said it expects favourable conditions for mineral sands in 2018, after an improvement in 2017.
Net debt fell to $183 million from $506 million while zircon output for the fourth quarter declined to 59,000 tonnes from 65,300 tonnes.
Banks and healthcare firms were the best performers by sector, with CBA shares advancing 0.7 per cent to $79.19 after Australia's biggest bank said that it has promoted the head of its retail business, Matt Comyn, to chief executive officer.
Goldman Sachs analysts weighed in on CBA's choice, noting that Mr Comyn has extensive experience in retail banking and his nearly 20 years' experience at the CBA will be key for the group to navigate any negative sentiment stemming from AUSTRAC proceedings.
Elsewhere in the banking sector, Westpac climbed 0.6 per cent to $31.11 and NAB rose 0.7 per cent to $29.26.
Healthcare stocks gaining ground included CSL, up 1.6 per cent to $149.84, and ResMed, which lifted 2.6 per cent to $12.66.
Deals provided a bit of a boost to the ASX as well on Monday, with AWE surging 16.5 per cent to 99c after a third bidder entered the race to buy the oil and gas producer, with Japan's Mitsui & Co offering 95?? a share, or around $594 million to purchase the company.
- With wires
CSL shares vaulted higher on Monday, with the healthcare firm ending the day up 1.6 per cent at $149.84. The European Medicines Agency's Committee for Medicinal Products for Human Use gave a positive use extension recommendation to CSL for its Hizentra product late Friday. Morgan Stanley analysts noted that the firm is due to report half-year earnings on the 14th of February. "New product launches and an early flu season increase the Street's conviction an upgrade to CSL's full-year 2018 guidance is nigh - though it's already implicit in the valuation," they said. The broker's expecting revenue to reach $US3.9 billion, net profit of US$846 million, EPS of US$1.89 and a dividend per share of US83??.
The currency has advanced for seven straight weeks as the US dollar has slumped and rising prices for commodities such as iron ore have bolstered the outlook for Australia's exports. "For now, it is tough to fight," said Athey, a senior investment manager at Aberdeen, which oversees about $US810 billion ($999 billion). "But in the medium term, the Australian economy does not welcome a stronger Australian dollar. Plus, I expect commodity prices to moderate." The Aussie dollar was trading at US80.96c on Monday.
Sydney home prices continued to slip further than the national average last week, CoreLogic property data showed. Home values were down 0.1 per cent across Australia's five major capital cities in the week ending January 28, with Sydney falling 0.2 per cent, Melbourne, Adelaide and Perth's prices dropping 0.1 per cent, while Brisbane prices were flat. On a monthly basis, home values on average were down 0.4 per cent with Sydney leading declines with a 0.7 per cent fall. The median house price in Sydney is $800,000, while the median unit price is $647,500.
Citi's strategy team are positive for a continued improvement in the global economy, they said. "We remain bullish on the outlook calling for above-consensus global growth (3.4 per cent in 2018 and 3.3 per cent in 2019) and steady (below consensus) inflation and moderate monetary tightening," the strategists said. They said that they continue to see upside risks to growth, inflation and policy rates. "Our estimates suggest that global growth could surprise by 0.3 percentage points after a 0.6 percentage point surprise in 2017."
A growing frenzy for Chinese offshore stocks has taken a new turn as investors bid up underperformers. About a third of the companies on the Hang Seng China Enterprises Index racked up fresh one-year highs last week, the biggest proportion since the country's 2015 stock bubble. Laggards such as PetroChina and China Galaxy Securities have soared, while stubbornly cheap banks are turning red hot. As a bull market in the China H-share gauge extends into the 715th day, one of the longest in its 23-year history, investors are finding plenty of reasons to buy and few to sell.