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The ASX gained ground for the second time in four sessions, with investors moving back into the banks as concerns over a global tit-for-tat trade war faded as the US appeared to soften its stance on neighbouring countries.
"Australian shares are vulnerable to the concerns impacting global markets – particularly US inflation and Fed fears and worries about a trade war – but we remain of the view that the ASX 200 will be higher by year end," said Shane Oliver, head of investment strategy at AMP Capital.
The S&P/ASX 200 index advanced 40 points, or 0.7 per cent, to 5942 while the All Ordinaries rose 41 points, or 0.7 per cent, to 6046 and the Australian dollar traded at US78.31¢.
Thursday's gains came after signs that there will be some leeway in the US tariffs on steel and aluminium that could be introduced as soon as Thursday US time, with the latest signals coming from reports that that Trump administration will initially exclude Canada and Mexico from the proposed tariffs.
Investors are concerned that trade tensions will halt the global economic upswing that has provided the backdrop for equity market gains both in Australia and overseas. Signs of that economic progress emerged on Thursday with trade data from Australia and China as well as through GDP data from Japan.
Bank share prices have proved to be sensitive to sentiment around trade and the sector moved firmly higher on Thursday, with CBA up 1.4 per cent at $76.17, Westpac up 0.4 per cent at $30.00, ANZ up 0.5 per cent at $28.35 and NAB higher by 1.3 per cent to $30.08. Outside the big four, Macquarie shares jumped 1.8 per cent to $104.02.
Investors went bargain hunting in other sectors as well, with CSL shares up 1.3 per cent at $163.84 and A2 Milk, up 4.7 per cent at $12.25.
Miners were lower, however, with both BHP and South32 trading without rights to their latest dividend payouts. BHP shares fell 2 per cent to $28.82 and South32 dropped 2.7 per cent to $3.25.
Around 28 companies went ex-dividend on Thursday. The ASX was among their number and the stock exchange operator fell 1.4 per cent to end the session at $57.39.
"A total of 92 per cent of Australian companies either raised or maintained their dividends in the most recent reporting season indicating a high degree of confidence in the earnings and growth outlook," noted Dr Oliver at AMP.
The Trump Administration is caught in its own pincer movement: between the fiscal stimulus it is injecting into the economy and its ambitions to reduce the trade deficit, ANZ's chief economist Richard Yetsenga writes.
Fiscal stimulus was delivered in 2017, and Trump's recently announced tariffs on steel and aluminium suggest that trade is 2018's priority. Whether and how it avoids the pincer will define the economic landscape in 2018.
It's widely acknowledged the United States' fiscal expansion is coming at the wrong time of the economic cycle. That's because it's adding stimulus in the form of substantial additional government spending when the economy is already at or close to full employment.
That's both inflationary and bad for the sustainability of the federal deficit. Yet less well recognised is the relationship between this stimulus and one of President Trump's other policy fundamentalisms: trade.
The US economy, in my view, is now "late-cycle"; that is we should be thinking about how the end of the cycle unfolds, rather than continuing to talk about recovery.
China's exports unexpectedly surged at the fastest pace in three years in February, suggesting its economic growth remains resilient even as trade relations with the United States rapidly deteriorate.
Trade tensions have jumped to the top of the list of risks facing China this year, with proposed US tariffs on steel and aluminium imports suggesting more measures may be on the way, Zhou Hao, senior emerging markets economist at Commerzbank, told the Reuters Global Markets Forum this week.
China's February exports rose 44.5 per cent from a year earlier, compared with analysts' median forecast for a 13.6 per cent increase, and an 11.1 per cent gain in January, official data showed on Thursday.
Imports grew 6.3 per cent, the General Administration of Customs said, missing analysts' forecast for 9.7 per cent growth, and down from a sharper-than-expected 36.9 per cent jump in January.
Analysts caution Chinese data early in the year can be heavily distorted by the timing of the Lunar New Year holiday, which fell in February this year but in January in 2017.
But combined January-February trade data also showed a dramatic acceleration in export growth.
Exports rose 24.4 per cent on-year in Jan-Feb, much better than 10.8 per cent in December and 4 per cent growth in Jan-Feb last year. Imports in the first two months of the year rose 21.7 per cent, compared with 4.5 per cent in December.
Australian stocks are higher today and Asian stocks are advancing as well as concerns over a trade war triggered by US metal tariffs faded.
Bloomberg reported that the Trump administration will initially exclude Canada and Mexico from proposed tariffs on steel and aluminum imports.
The two nations won't be subject to tariffs on their steel and aluminum if they sign a new North American Free Trade Agreement that meets the satisfaction of the US, White House trade adviser Peter Navarro said.
He added that other American allies could use a similar system to ask for an exemption.
The European Central Bank holds a policy meeting Thursday, while the Bank of Japan concludes monetary discussions Friday.
Japan's Nikkei 225 Stock Average rose 0.9 per cent, South Korea's Kospi index climbed 0.5 per cent, Hong Kong's Hang Seng Index climbed 0.8 per cent. The Shanghai Composite Index lost 0.3 per cent, however.Back to top
Women holding management positions are still a rare breed at some major central banks.
While former Federal Reserve Chair Janet Yellen broke new ground as the first female holder of that post, analysis of the world's most prominent monetary institutions underlines just how unusual her tenure has been in such male-dominated bureaucracies.
The proportion of women in management at those central banks ranges from 50.9 percent in Sweden to 3.4 percent in Japan -- often significantly below the national female employment rate.
The ASX was holding onto an early advance at lunchtime, with gains from the banks offsetting some losses in the mining sector where some of the biggest names were trading ex-dividend.
The S&P/ASX 200 index rose 34 points, or 0.6 per cent, to 5936 while the All Ordinaries advanced 35 points, or 0.6 per cent, to 6040.
The Australian dollar traded at US78.23¢ after an unexpectedly large trade surplus was recorded for January.
Banks advancing included CBA, up 0.9 per cent, NAB, up 0.8 per cent and ANZ, up 0.7 per cent.
Miners were lower, however, with both BHP and South32 trading without rights to their latest dividend payouts. BHP shares were down 2 per cent and South32 dropped 1.5 per cent.
Around 28 companies went ex-dividend on Thursday. ASX was one of them and the stock exchange operator lost 1.4 per cent.
Gareth Aird of CBA called the January trade surplus of $1,055 million "decent" and a "welcome turnaround" after December's sizeable deficit.
The surplus was far larger than expectations of a $160 million surplus and Mr Aird said that it can be largely attributed to a $770 million lift in non‑monetary gold exports.
"The rest of the detail was broadly as expected," he said. Within that detail he noted that tourism imports rose by more than exports.
"It looks like the higher Australian dollar (up around US 80 cents in early 2018) has started to have a negative impact on the tourism trade balance," Mr Aird said.
Australia's GDP data came out yesterday, showing growth of 2.4 per cent for the Australian economy over 2017 and Shane Oliver at AMP said that continuing economic growth should provide a reasonable backdrop for Australian growth assets.
While, he noted that shares remain vulnerable to the concerns impacting global markets – particularly US inflation and Fed fears and worries about a trade war - Dr Oliver said that he is sticking with his forecast for a higher ASX200 by the end of the year.
Still, global shares are likely to outperform Australian shares on capital growth, he said, as they have done since October 2009.
Over the last five years, global shares have outperformed in local currency terms by nearly 4 per cent per annum and by 9 per cent per annum in Australian dollar terms, he said.
"This reflects relatively tighter monetary policy in Australia, the commodity slump, the lagged impact of the rise in the Australian dollar above parity in 2010, and a mean reversion of the 2000 to 2009 outperformance by Australian shares."
Earnings growth in Australia is around 7 per cent but global shares have earnings growth of double this amount which suggests that the relative underperformance of Australian shares in terms of capital growth may go for a while yet," Dr Oliver noted.
As Donald Trump himself has often pointed out, equity investors have found plenty to like in the president's mix of tax cuts and de-regulation.
Now, a month on from the US stock market's correction, potential buyers of the recent weakness are having to rapidly calibrate the scale of the threat to economic growth and corporate profits posed by an escalation in global trade protectionism.
Less than 24 hours after Gary Cohn, the former Goldman Sachs executive and opponent of the tariffs planned by the White House, announced his plan to quit as Mr Trump's top economic adviser, the EU floated proposed duties on a range of US goods that could include Harley-Davidson motorcycles, Levi jeans and bourbon.
While rising trade tension have soured the broad backdrop, the reaction so far has been modest. The Canadian dollar and Mexico peso — currencies exposed to the potential collapse of the North American Free Trade Agreement — have weakened, as have the shares of major exporters such as Boeing and Caterpillar.
Global car markers and steel producers have also been sold by rattled investors.
The risk to corporate profits from a series of retaliatory tariffs imposed by the world's biggest economic powers is hard to estimate, but analysts say a weaker global economy, accompanied by more inflationary pressures, may well extend the correction that shook markets at the start of February.
"The important issue is whether or not Cohn's departure will mark a radical shift in US trade and economic policies," said Stephen Gallo, European head of foreign exchange strategy at the Bank of Montreal. "If it does, it could have massive implications for global growth."Back to top
UBS analysts believe that short-term sentiment appears mixed around BlueScope Steel but the long-term outlook is compelling.
"We think the near-term outlook for US spreads is influencing investors' view on BlueScope," the analysts said.
They noted that, after running up to around $US380 a tonne on news of US tariffs, investors appear to be wondering how high steel prices can rise.
Investors seem to be weighing up the impact of lifting US steel utilisation rates which at 79 per cent are at the highest level since early 2015 and possible demand destruction, the analysts added.
"While we expect some short-term volatility as markets assess the impact of proposed steel tariffs, we remain comfortable with the long-term outlook," they said.
"We also think the market has yet to pay up for growth potential within the ASEAN business," the analysts added.
They have a buy rating on BlueScope and lifted their price target to $18.75 from a previous level of $18.10. Shares rose 1 per cent to $16 on Thursday.
Australia recorded a trade surplus of $1.1 billion in January after exports rose 4 per cent and imports fell 2 per cent, data from the ABS showed.
Economists had been expecting a trade surplus of $0.16 billion, according to consensus estimates compiled by Bloomberg.
The trade deficit recorded in December was revised to $1.1 billion.
The trade balance was in surplus for seven consecutive months in 2017 before it fell into deficit in December.
The Australian dollar rose to US78.35¢ after the release of the data, up from US78.26¢.
Japan's economy expanded at an annualised rate of 1.6 per cent in the final three months of 2017, revised up from a preliminary estimate of 0.5 per cent growth due to an upward revision to capital expenditure, the Cabinet Office said on Thursday.
The revised gross domestic product figure compared with the median estimate of 0.9 per cent growth in a Reuters poll of economists.
On a quarter-on-quarter basis, GDP rose a revised 0.4 per cent in real, price-adjusted terms. That compared with the initial reading of 0.1 per cent growth and economists' median estimate of a 0.2 per cent gain.
Morgan Stanley says that ANZ is its preferred major bank, as it believes the lender offers a good cost story, an improving risk profile, up to $5.5 billion of buybacks, and a sustainable payout ratio.
"ANZ missed the margin sweetspot in 2H17, but we think it's less vulnerable to the emerging headwinds in retail banking," the broker said.
Broadly, Australia's major banks face a deteriorating revenue growth outlook and increased political and regulatory scrutiny, with little room to deliver a positive surprise on expenses, loan losses, capital management or dividends, the broker said.
However, ANZ's ROE, EPS and dividend outlook is more attractive than peers, the broker said, as it also noted downside risk to ANZ's margins in retail and institutional banking.
Morgan Stanley forecasts ANZ's revenue will fall around 2 per cent this year given a net $450 million headwind from asset sales and non-recurring items and a 2.5 per cent drag from lower markets income.
Underlying income growth should improve to around 3 per cent to 4 per cent in fiscal year 2019 but revenue from Asian retail and wealth operations will drop a further $750 million and forecasts rely on a moderation of Institutional margin pressure, the broker added.
ANZ shares were up 0.6 per cent at $28.38.
The percentage of female board appointments spiked at the start of 2018, but further momentum will be crucial in order to reach a target of 30 per cent female representation for Australia's top 200 companies by the end of the year.
Women accounted for 47 per cent of board appointments across the ASX 200 companies in the first two months of 2018, up from a sluggish 36 per cent a year ago, and now make up 26.7 per cent of directorships, a new report by the Australia Institute of Company Directors (AICD) shows.
The findings, released on International Women's Day, show that the number of top 200 companies which have no women around the board table now stands at five, down from 14 recorded this time last year.
Galaxy Resources and Beach Energy both left the list earlier this year, but Pilbara Minerals has been named, alongside ARB Corporation, Speedcast International, Ardent Leisure and TPG Telecom, after entering the ASX 200 in December.
AICD Chairman Elizabeth Proust says the result marks the highest rate of female appointments to ASX 200 boards since the AICD began tracking gender diversity statistics.
Across the ASX 200, a total of 74 companies - such as Fortescue Metals Group, Medibank Private, Nine Entertainment and Woolworths - have reached or exceeded the 30 per cent representation target.Back to top
The Australian share market rose in early trading, with banks rebounding as concerns over a potential global trade war eased a touch.
The S&P/ASX 200 index climbed 22 points, or 0.4 per cent, to 5924 while the All Ordinaries index advanced by the same amount in points and percentage terms to trade at 6027 and the Australian dollar traded at US78.17¢.
US stocks ended mostly lower but off their worst levels overnight after the White House said there would be carve-outs for Mexico, Canada and others, based on national security grounds.
Australian stocks tumbled yesterday after the resignation of key White House economic adviser Gary Cohn ratcheted up concerns that potential US metal tariffs will lead to a full-blown trade war.
Banks took the brunt of the selling yesterday but took back some of those losses on Thursday, with CBA up 0.7 per cent, NAB up 0.7 per cent, ANZ up 0.5 per cent, Westpac up 0.4 per cent and Macquarie higher by 1.3 per cent .
BlueScope Steel shares were up 1.8 per cent but metal extractors were broadly losing ground.
BHP fell 1.9 per cent, South32 lost 2.1 per cent, Newcrest traded down 0.8 per cent and Regis Resources fell 2.4 per cent.
Leading female fund managers want more young women to pursue careers as investors, which is not only positive for correcting the gender imbalance within the industry, but has been proven to deliver higher returns because diverse investment teams outperform all-male ones.
Asset management faces another hurdle before women start their careers: the professional services firms and investment banks are so successful at recruiting women and projecting flexible and progressive workplaces that junior roles in funds management are still dominated by young men.
"The problem for us as an industry is that we're not doing enough to actually advertise our industry to the students that are coming out. The banks are getting them, the accounting firms, the management consulting firms, they're getting in ahead of the funds management industry," said Catherine Allfrey of WaveStone Capital.
"They just don't know our industry exists; I don't think we've done enough to promote it."
The custodians of capital are showing a willingness to change. The asset consultants and super funds need to "ask the same questions that we ask about boards and management teams of their investment teams," said Jacqueline Fernley, a portfolio manager at Colonial First State Global Asset Management, in the core Australian equities team.
One industry super fund has already stepped up. Hesta is surveying 70 of its Australian and international investment managers about their gender diversity from the analyst level to the investment committee. Hesta sees diversity as an indicator of a well-run organisation more likely to drive results. That means beating the market.
Hopes have risen that Australian steel and aluminium exports may be spared Donald Trump's tariffs after the White House said there would be carve-outs for Mexico, Canada and others, based on national security grounds.
With the US President expected to detail his tariff plans by the end of the week, White House press secretary Sarah Sanders flagged the carve-outs at a briefing overnight Australian time.
"There are potential carve outs for Mexico and Canada based on national security, and possibly other countries as well based on that process," she said.
"That would be a case-by-case and country-by-country basis, but it would be determined whether or not there would be a national security exemption."
When George W Bush imposed tariffs on steel in 2002, Mexico and Canada were spared due to them being signatories to the North American Free Trade Agreement.
Australia has been arguing for an exemption on national security grounds and on the basis it is a strong defence ally.
Earlier this week, trade hawk Peter Navarro, director of the White House's National Trade Council, said while there would be no country exemptions, there was scope for exempting individual businesses from the 25 per cent levy on steel and 10 per cent levy on aluminium.
Here's IG Markets' Chris Weston on what to expect from the markets today:
There are still too many unanswered questions to think it safe to increase exposures to risk assets with any real conviction, and my view that Monday's 1.1% rally in the S&P 500 was "unconvincing" is one that I continue to hold here.
The overnight session, and the effective lead for Asian markets today is clearly less negative than feared.
There is little inspiration to be taken from the moves in the S&P 500 sub-sectors where financials, materials and energy are all lower by 0.3% or more and most of the index support has come from US tech.
Energy has been the noticeable underperformer and this is clearly a reflection of a 2% fall in crude, with the barrel falling into the low $61 area.
If S&P 500 implied volatility is telling us anything it is that traders are not convinced this trade saga morphs out into a genuine vol event like we saw in 2002.
That said, let's keep an eye out for the formal announcement, which is due either tonight or Friday. This should be interesting as the facts are what the market craves.
The focus also comes at a time when the market has to navigate itself through tonight's (23:45 aedt) ECB meeting and tomorrows US payrolls and wage data.
One could argue the market will be eyeing China trade data. The fact economists are expecting a trade deficit of $5.7 billion is interesting.
Perhaps it is not so much about the absolutely level of China's trade data but whether their $21.8 billion trade surplus with the US heads lower and appeases Donald Trump and the likes of Wilbur Ross and Peter Navarro.
AUD/USD trades year-to-date lows
Aussie Q4 GDP and US payrolls take centre stage this week, with volatility kicking up and USD finding its feet. This video was produced in commercial partnership between Fairfax Media and IG Markets.
Wall Street rebounded somewhat in the final hour of trading amid thin volume as a winter storm battered the US east coast.
Both the Dow and the S&P 500 ended the day lower while the Nasdaq drifted higher.
Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers chairman Kevin Hassett that indicated the trade policy is not yet finalised.
White House spokesperson Sarah Sanders said "there are potential carve outs" for the northern nation in the coming tariffs.
Trade angst still set the tone in US equities, with multinationals in the Dow Jones Industrial Average leading declines, while domestically focused small caps paced gains.
Treasuries pared an advance to trade little changed, while Bloomberg's dollar index fell versus the Canadian dollar and gold, oil, copper, aluminium and iron ore all were lower. Aluminium lost 2.3 per cent.
European shares clawed back losses on Wednesday as deal-making speculation reinvigorated trading following a muted start to the session.
The pan-European STOXX 600 index ended with a gain of 0.4 per cent, after climbing steadily through the day.
Shares in tech stocks led gainers with a 1.2 per cent rise, while autos advanced 0.6 per cent.
Renault was the biggest auto gainer, up 5.6 per cent following a Reuters report that Nissan was in talks with the car maker to buy the bulk of the French state's 15 per cent Renault holding.Back to top