Home World Business ASX ends dramatic week on upbeat note as energy firms gain

ASX ends dramatic week on upbeat note as energy firms gain

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Australian shares ended Friday’s session on an upbeat note, with investors buying into energy stocks after a dramatic week that included the news of a royal commission into the financial sector. 

The S&P/ASX 200 index added 19 points, or 0.3 per cent, to 5989, while the All Ordinaries index rose 0.3 per cent to 6075. The Australian dollar reached US75.63¢, with a reading on China’s manufacturing health hitting a five-month low.

For the week, the benchmark eked out a 0.1 per cent gain, adding just 7 points. 

The benchmark started the day on a bright note after Wall Street rallied hard on Thursday on signs that a overhaul of the US tax system was progressing well.

However, the ASX moved off its best levels in the afternoon after the tax overhaul stalled in the US senate. Lawmakers will now be required to weigh new options to address complaints by a leading fiscal hawk about a projected US$1 trillion increase of the federal deficit.

Hope that the tax cut plan would quickly clear the senate emerged earlier in the week and boosted banks on both sides of the Pacific, along with signals from incoming Federal Reserve chairman Jerome Powell that regulation around US lenders may be less onerous going forward.

However, tentative hope that less onerous US regulation would eventually lead to a more relaxed regime for Australian banks was dealt a blow on Thursday when a royal commission into the financial sector was announced.

Banks were mostly higher on Friday as investors continued to assess the implications of the inquiry into the sector, with NAB up 0.1 per cent, ANZ up 0.6 per cent and Westpac up 0.3 per cent. CBA was lower by 0.3 per cent. 

Telstra shares ended down 0.3 per cent after the telecom giant downgraded its guidance following this week’s NBN announcement of super-fast broadband rollout delays.

Energy sector companies were some of the best performers on Friday, with Woodside up 1.2 per cent, Caltex up 2.8 per cent, Origin Energy up 1.6 per cent, Oil Search higher by 2 per cent and Beach Energy jumping 8.6 per cent. 

The gains followed the news that OPEC and Russia agreed to extend oil production output cuts on Thursday. 

GetSwift soared 84 per cent to $3.60 before the shares were suspended. The firm said Friday that it had “signed a global agreement with Amazon” without offering more details. It also said that it had signed a multi-year partnership with the operator of KFC, Taco Bell and Pizza Hut fast food restaurants.

Vacuum cleaner merchant Godfreys plunged 21 per cent and touched a record low in Friday’s session after it cut its earnings forecast due to weaker than expected sales and delays in its franchise rollout. 

– With wires

Stockwatch

Energy company Origin was a strong weekly gainer in the ASX200 as it continued to build on a share price advance that has seen the stock lift around 38 per cent this year. Origin updated its shareholders on Tuesday, when it revised up its output guidance for huge Eraring coal plant in NSW, confirmed market expectations for financial performance and set aggressive cost cutting targets for its Australia Pacific LNG project in Queensland. The gains for Origin shares came even as the firm’s chief executive Frank Calabria played down an early return to dividend payments. Shares climbed 5.7 per cent over the week after rising 1.6 per cent on Friday.

Manufacturing PMI

The Australian dollar flattened out at US75.63¢ on Friday, with investors parsing some mixed readings on manufacturing. While two surveys from Australia indicated that manufacturing improved in November, with growth in production, new orders and sales, exports, employment, supplier deliveries and inventories boosting the index, it was a different story from China where a 50.8 reading for Caixin’s manufacturing purchasing managers’ index in November hit a five-month low. “Softer domestic demand appears to be to blame,” said Capital Economics.

Oil

Brent crude advanced 0.4 per cent to 62.88 a barrel after OPEC and non-OPEC producers led by Russia agreed to extend oil output cuts until the end of 2018. The producers are aiming to finish clearing a global glut of crude while signalling a possible early exit from the deal if the market overheats. Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t climb too fast and rival US shale firms don’t boost output further.

Asia

Asian stocks gyrated after paring early gains at the start of the last month of 2017 as President Donald Trump’s crucial US tax bill encountered stumbling blocks in the US Senate. The senate suspended votes on the bill until Friday after it emerged that a key compromise to help its passage had collapsed. In Japan the Nikkei 225 Stock Average rose 0.5 per cent, after reclaiming a 25-year high reached in November. The Hang Seng index traded flat in Hong Kong and the Shanghai Composite Index slipped 0.4 per cent on the Chinese mainland.

Fonterra

New Zealand dairy firm Fonterra was ordered to pay French company Danone 105 million euros ($125 million) over a contamination scare, a smaller-than-expected sum, though it prompted Fonterra to cut its earnings forecast. An arbitration tribunal made the ruling on Friday in a dispute between Fonterra, the world’s biggest dairy producer, and Danone over a scare involving a Fonterra ingredient used by the French food manufacturer in 2013, which led to a recall based on erroneous information. Shares ended the day up 0.3 per cent.

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