ASX set to chase Wall Street higher; BHP lifts iron ore guidance

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ASX set to chase Wall Street higher; BHP lifts iron ore guidance

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The ASX reached an 11-month high on Wednesday as technology stocks out-performed, another iron ore exporter forecast higher production, and the incoming Biden administration highlighted the importance of its $US1.9 trillion ($2.5 trillion) stimulus package.

The S&P/ASX200 hit 6788.1 points during morning trade before closing 0.4 per cent higher at an 11-month high of 6770.4 points. This puts the index only 5.3 per cent below the all-time highs of February 2020.

Australian shares hit a fresh 11-month high on Wednesday.Credit:Michel O’Sullivan

The information technology sector out-performed after Wall Street’s Nasdaq index gained 1.5 per cent.

The local sector gained 2.5 per cent as Afterpay touched new highs of $142.30 before closing 5.2 per cent higher at $141.

WiseTech Global gained 4.8 per cent, while Megaport dropped 5.5 per cent to $12.12.

Industrials gained 1.6 per cent as Transurban improved by 4.4 per cent to $13.51 thanks to an analyst upgrade. While mining giant BHP gained 0.9 per cent to $46.30 after increasing its iron ore production estimates to as much as 255 million tonnes this financial year.

Senior client advisor at Novus Capital, Gary Glover, said he was keeping a close eye on trading volumes to gauge the next big swing in the market following the November and December rises.

“It seems strange, but sometimes markets need time for the smart money to get out,’’ Mr Glover said.

A sharp increase in volumes would be an indication the market was about to move, and he believes that would be downwards given stock prices have run pretty hard.

“I want to be lightening off as everyone else is getting greedy.”

He added markets would remain “sedate” until the US reporting season finishes with the change in administration unlikely to have much impact on markets.

“I think reporting season will be more interesting because it might be confession season. Price to earnings ratios in any sort of metric (are) historically the greatest valuations ever.’’

Meanwhile Bell Direct market analyst Jessica Amir noted lithium miners were rallying.

The lithium sector was emerging from a two-year bear market and would soon be in bull market territory thanks to interest from electric vehicle makers who use the mineral in batteries.

“They have been some of the best performers in the ASX this (past) year,” Ms Amir said.

Galaxy Resources gained 7.5 per cent to $3, the highest price since July 2018, Orocobre was up 10.5 per cent to $5.70, also a two-year high, and Pilbara Minerals closed at an all-time high of $1.25 on Wednesday.

The ASX 200 added 0.4 per cent on Wednesday to close at 6770.4, its highest since February 25 last year. BHP was strong, while Afterpay, Transurban, and Aristocrat Leisure banked solid gains.

Nasdaq futures are up 0.4 per cent, the S&P 500 E-Mini is 0.1 per cent higher, and the Dow looks set to open flat as news filters through that outgoing president Donald Trump has pardoned his former adviser Steve Bannon.

The Australian sharemarket is ahead 0.6 per cent in the closing stages and heading for its best close in 11 months.

The benchmark index added 40.5 points to 6783.1 b7 3.45pm AEDT thanks to gains by miners BHP, Rio Tinto, Fortescue Metals, big lender Westpac, tech darling Afterpay, and toll giant Transurban.

The previous 11-month high close was set on January 8, when the market finished at 6757.9. You’ve then got to go back to February 25 last year to find a better close.

The ASX 200 already set a new 11-month intraday high today in touching 6788.1.

It is about 5 per cent off its all-time record high.

Opinion

BHP’s board is understandably riding high having delivered another strong quarterly on the back of an iron ore price that refuses to abide by the laws of gravity.

BHP chairman Ken MacKenzie tamed activist shareholder Elliott Partners.

Cranking maximum production out of its West Australian operations productively will be first, second and third on the company’s list of priorities in 2021.

What has apparently not been on the agenda of chairman Ken MacKenzie’s board for at least 18 months is the potential for cleaning up BHP’s corporate structure by collapsing its Australia and UK dual listing.

If one casts back three or four years to when BHP’s activist 5 per cent shareholder Elliott Partners was still talking publicly about its campaign to push for an end to BHP’s dual listing, it was the $1 billion tax roadblock that stood in the pathway of unification.

Read Elizabeth Knight’s full column here 

Boost Juice founder Janine Allis has made her pitch to API investors to be elected to the board at the annual general meeting under way this afternoon.

Allis told investors she would be focused on “profit and growth” of the pharmaceutical brands retail brands.

“My main focus on the board with API is around the consumer facing side of the business – Priceline, anything to do with ecommerce and Clear Skin [the company’s non-invasive cosmetics procedures brand]”.

Proxy votes were 98.95 per cent in favour of her election.

API shares have gained traction throughout the meeting and are now where they started the session, at $1.23.

The world’s second-largest cryptocurrency, Ethereum, has soared to a new all-time high following significant investor enthusiasm for Bitcoin alternatives in the nascent digital currency space.

The price of one ‘ether’ reached $US1430 ($1855) overnight after a surging rally that began days after the new year and saw the digital token grow 82 per cent in under three weeks.

Ethereum has now traded higher than in 2017, where a similar end-of-year rally saw the currency reach $US1400. The most recent price movement follows a similar boom in leading cryptocurrency Bitcoin, which hit over $52,000 in early January.

But while Bitcoin’s rally was fuelled by retail and traditional investors looking to get a foot in the door, Ethereum’s is likely due to those same investors diversifying their portfolio in the cryptocurrency sector.

Asher Tan, founder and chief executive of Australian crypto exchange CoinJar, says Ethereum is the second most-traded coin on his exchange and notes its popularity often grows following a jump in the price of Bitcoin.

“Usually investors will start out buying Bitcoin, and then they’ll diversify their gains into other coins,” he said. “Or they’ll be looking at what to buy and then see that Bitcoin has gone up so much, so they’ll get the second-best thing.”

Read the full story here

The maker of the Mt Elephant brand hemp food increased in value by as much as 62 per cent today after announcing a capital raising on the back of a new retail distribution deal with Woolies.

Shares in Australian Primary Hemp hit a high of 62 cents, and was still 34 per cent higher at 51 cents this afternoon, after it emerged from a two-day trading halt with details of a $6.2 million capital raising.

The company’s share price had already jumped 18.8 per cent on Friday when it revealed it had signed a deal with Woolworths to stock its protein pancakes, protein balls, and bread mixes from March.

The agreement is expected to add an extra $2.31 million in revenue a year.

APH said it is banking on growing demand for plant-based superfoods in home cooking and on-the-go, reflected in its November deal to stock products at 7-Eleven stores.

The company also told investors on Wednesday there were several other contracts on the pipeline.

For the capital raising, APH has received commitments from sophisticated investors to raise $5.2 million at 32 cents per share. Another $1 million will be raised via a share purchase plan.

The money will be used to expand production capability, including milling and de-hulling equipment, silos, and automated packaging.

APH’s website says it was formed in 2016 “with good mates, a passion for agriculture and an interest in developing a sustainable food source”. The company also developed hand sanitiser and hemp face masks last year.

Priceline pharmacy operator API is about to kick off its annual general meeting and chief executive Richard Vincent has warned investors that while retail sales have bounced back, conditions are still challenging, particularly for CBD pharmacies.

The $650 million pharmaceuticals wholesaler experienced saw flat revenues last year at $4 billion as many of its stores and skincare business was forced to shutter during lockdowns.

Mr Vincent declined to give long term guidance for the company but said investors should expect a first half result below last years’ numbers, which were largely unaffected by COVID.

“We are expecting solid improvements in our retail performance in the second half. The quantum of those improvements will likely depend on the rollout of the COVID vaccine,” he said.

The company once again signalled its hopes of being involved in the vaccine rollout, saying the business was standing ready to assist the government in the later stages of the program.

Many of API’s operations rely on consumers’ willingness to spend on pharmacy retail and skincare, and Mr Vincent warned conditions are still tough.

“In my view, the true test of our economy’s strength will be when the government’s emergency support measures, including JobKeeper, end in March,” he said.

API shares were trading down 0.4 per cent to $1.23 just before the AGM’s 2:00pm start.

Downer EDI, the $3.8 billion engineering and infrastructure management firm, was buoyant on Wednesday after winning a new $330 million contract with Telstra to help roll out 5G and wideband business services.

Shares in Downer were up 2.2 per cent to $5.48 in early afternoon trade, outperforming a 0.6 lift for the wider ASX 200, after it announced it had extended its relationship with the telco giant.

Downer has won an infrastructure support contract with Telstra to roll out its 5G network. Credit:Rob Homer

The field services contract begins in January 2021 with an initial four-year term, with one extension option of up to one year. Under the contract, Downer’s role will include network asset relocations, wideband business services, facilities design and construction activities including Telepower and building upgrades; and a continuation of the 5G mobile rollout.

These activities will be delivered across New South Wales, Victoria, Tasmania, South Australia and the Northern Territory.

“Downer has been working closely with Telstra for over a decade and we have earned a reputation as a high-quality contractor trusted for our delivery excellence,” chief executive Grant Fenn said.

The company lost 33 per cent of its value in 2020 during the market’s pandemic slump. Two weeks ago Downer touched a 10-month high of $5.81. The company’s biggest shareholders are the Vanguard Group with a 6.1 per cent stake and Nikko Asset management with a 5.3 per cent share. L1 Capital and T.Rowe Price International each hold 5 per cent.

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