Article / 28 January 2015 at 7:06 GMT

Aussie Market Wrap: Low inflation figures keep the market buoyant

Trading Desk / Saxo Capital Markets
  • Market shows some resilience in the wake of major overseas falls
  • AUDUSD shoots up past 0.80 based on lower inflation data
  • Gold miners doing well on the back of resurgent gold price

By Saxo Capital Markets Australia
The Aussie markets performed very well today despite weak leads from the US. Our S&P/ASX200 index closed the day up 5.58 points or 0.10% to 5,552.80, led by energy, materials and our telcos. In an impressive turnaround, our banks started the day weaker but reversed losses to all finish positive: Westpac Bank led our banks, rising 12 cents or 0.35% to AUD34.68, ANZ rose 7 cents or 0.21% to AUD32.64, National Australia Bank added 5 cents or 0.14% to AUD35.20. The Commonwealth Bank of Australia gained 7 cents or 0.08% to close at AUD87.70 after reaching an all time high of 87.97.

Following gold's gains overnight, Newcrest Mining, our largest gold miner, rallied 24 cents or 1.77% to AUD13.80 and Northern Star Resources - our second biggest gold miner lifted by 7.5 cents or 3.88% to AUD2.01. Rio Tinto ended the day 18 cents or 0.32% higher to AUD56.98, BHP Billiton slipped 1 cent or 0.03% to AUD28.94 and pure iron ore miner Fortescue Metals dropped by 4 cents to close 1.92% lower at AUD2.04. Within the energy space, Santos Energy was the lead outperformer rising 4.5% to AUD7.90, Oil Search was up by 1.7% to AUD7.79 and Woodside Petroleum gained 0.29% to AUD34.35.

Billionaire businessman James Packer will have been watching the share price of Crown Casino (CWN) fall 33% in the past 12 months, but should be smiling from ear to ear after CWN rose 7.54% to AUD13.70 this trading day.  CWN has climbed on the back of Macau’s gross gaming revenue which was up 6% in the space of a week. CWN has 13 buy recommendations, two holds and one sell with an average target price of $15.51 on it. In particular, Goldman Sachs has a high conviction Buy and a target of $17.50.
 James Packer's Barangaroo casino construction in Sydney: Shares in Packer's CWN have surged in the past two days. Photo: iStock

Unsurprisingly, Qantas (QAN) also made the top five leaders for the day as it is poised to report NPBT up $1bn this financial year. With lower oil prices filtering through, QAN will benefit more in the second half of this year and with the expectation of 2016 being even better. With these surplus funds QAN has exercised its option to acquire new aircraft. Surplus cash is more likely to be used for a share buyback rather than to pay a dividend. Doing so would minimise investor expectation of future payments and to maximise flexibility in its capital structure.

Resmed (RMD) has been celebrating the announcement of this second quarter revenues of $423m, up 10% on the same time last year. Today, however, saw the market adjusting to speculators recent eagerness, dropping 3.46% to AUD8.09.

Echo Entertainment (EGP) fell 2.46% to AUD3.97 as investors adjusted their portfolios from domestic gaming revenues towards CWN’s exposure to Macau. We note that EGP has performed very well over the past year and is still up 14% in the week.

The AUD was firmer as a stronger than expected jump in underlying inflation made a near-term rate cut look less likely. The currency shot up by almost one US cent to above US80 cents after official data showed a surprise inflation increase.By 5.00pm (AEDT) on Wednesday, the local unit was worth exactly US80c up from US79.42c on Tuesday.

-- Edited by Adam Courtenay

Aussie Market Wrap is compiled by the Sydney trading desk at
Saxo Capital Markets


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