The bulls ride off into the sunset after posting an all-time high on the ASX

January 10, 2020 - 2 weeks ago
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The ASX bulls weren’t missing out on the ‘bullish party’ as they happily joined in on Wall Street celebrations, as the Australian share market mirrored the three major U.S. stock indices and headed into uncharted territory after posting a new all-time high of 6,933.20.

With the Middle East tension easing, investors turned their focus on the progress on the trade pact with China which is due to signed next week, which inspired renewed upside interest on the ASX 200.

China’s Vice Premier Liu He, head of the country’s negotiation team in China and U.S. trade talks, will sign the so-called “Phase-One” deal in Washington next week, the commerce ministry said on Thursday.

Gao Feng, a spokesman at the commerce ministry said, Liu, will visit Washington on Jan. 13-15.

Negotiating teams from both sides remain in close communication on the particular arrangements of the signing, Gao told reporters at a regular briefing.

U.S. President Trump said on Dec. 31 that the “Phase-One” deal with China would be signed on Jan. 15 at the White House. Trump also said he would sign the deal with “high-level representatives of China,” and that he would later travel to Beijing to begin talks on the next phase.

Trump cancelled plans to impose tariffs on US$160 billion (S$216 billion) in Chinese merchandise in mid-December – including hot consumer items such as mobile phones – but punishing tariffs remain on about US$250 billion worth of goods, including machinery and many electronic items.

U.S. Trade Representative Robert Lighthizer has said China committed to a minimum of US$200 billion in increased purchases over the next two years from US manufacturers, farmers, energy producers and service providers.

But Gao refused to confirm the figure on Thursday.

At the close, the benchmark S&P/ASX200 index finished the first full weekly session of 2020 up +54.8 points, or +0.8%, to 6,929 points, while the broader All Ordinaries closed above 7,000 for the first time, finishing up +50.5 points, or +0.72%, at 7,041.9 points.

After a bumpy start to the week, the ASX 200 managed to climb an impressive +186.7-point, or +2.72% gains for the week, to which, by far, is the most substantial weekly gains seen since the ASX displayed back in early February 2019 after surging +200.8-point.

With the help of substantial gains overseas, the benchmark S&P/ASX 200 index, so far, to the start of 2020, is up +239.5 points, or +3.5%, after gaining a whopping +18.38% back in 2019.

The Materials sector rocked in and out of the red, however, eventually fell into negative territory after yesterday’s sharp drop in iron ore which pulled Titans BHP into the bearish trenches and ended to a loss of -0.32% to $39.90, while Fortescue Metals dropped -1.11%, to $10.70, meanwhile, Rio Tinto managed to escape the loss and gain +0.23%, to $102.43.

After surging nearly to a 7-year peak of $1,611, the precious yellow metal plummeted mid-week, which sent Newcrest on a downward spiral and lost -1.4%, while Northern Star slipped -3.1% with Evolution plunging -6.0% after announcing its quarterly production would be at the lower end of guidance.

All of the “Fab Four” (banks) chalked up a healthy gain, with the Commonwealth Bank rising +1.2% to $82.50, with NAB closing to a gain of +0.4% to $24.93, while Westpac rose +0.7% to $24.65 and ANZ ended up +0.9% to $25.12.

Health care was up the most, gaining +2.1% with blood products giant CSL rising +2.8% to $299.30.

In the consumer sectors, supermarket giants Woolworths added +1.61%, while Coles climbed +2.89%, while Wesfarmers gained +1.4% to an all-time high of $43.90 and JB Hi-Fi advanced +2.2% to $40.94 after the Australian Bureau of Statistics released the retail sales figures for November which crushed the 0.4% forecast and surged to a 0.9% gain, with the previous reading at 0.0%.

The success of November’s Black Friday sales fuelled a better-than-expected retail turnover.

Consumers spent a seasonally adjusted $27.91 billion in November, according to Australian Bureau of Statistics data released on Friday, with department stores and clothing, footwear and personal accessory retailing leading the charge.

Elsewhere, Vocus surged +8.1% to $3.20, while Freedom Foods rose +5.5% after reporting it wasn’t disrupted by the bushfires and Objective Corp rising +5.2% after reporting a +24% rise in first-half profit.

Looking ahead, we still have the main event being the release of the Non-Farm Payroll Employment (NFP), which is expected to point to a slowdown in jobs growth after November’s bumper gains with the forecast view at 162,000, previous, 266,000.

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